It could be a while, possibly two decades, before many of the teenagers of today become homeowners in the future.
“We're at historically low levels of first-time buyers,” said Matt Christopherson, senior research analyst with the National Association of Realtors.
The percentage of first-time homebuyers in the market peaked in 2010, with the introduction of the first-time buyer tax credit when half of the nation’s home sales were to first-time homebuyers.
“We've gradually declined since then, with deteriorating affordability and inventory, where last year we took an even steeper dive and only 26% of buyers were first-time buyers,” Christopherson said Thursday during an event in Wilmington.
The Wilmington-Cape Fear Home Builders Association (WCFHBA) and Cape Fear Realtors (CFR) partnered to present its annual housing and construction forecast Thursday morning.
In addition to Christopherson, the event at the Terraces on Sir Tyler featured UNCW regional economist Mouhcine Guettabi and Robert Dietz, senior vice president and chief economist of the National Association of Home Builders.
All of the experts shared additional insights and predictions.
Christopherson said the NAR has been tracking first-time homebuyer ages since 1981. “Back then the typical first-time buyer was 29 and the typical repeat buyer was 36. So fast forward to this past year and the repeat buyer age is now the age of first-time buyers,” he said. “It’s really taking people a lot longer to be able to compete and get into the home buying market.”
Part of the problem when it comes to affordability and trying to compete for housing is an ongoing lack of supply.
“If you're interested in making sure we have enough inventory in the market and you're not concerned about the construction industry, you need to be and the reason why is that it's a death-by-1,000-cuts exercise,” Dietz said.
He said 23.8% of the typical newly built single-family home cost is regulatory costs. Examples include green space requirements and land you can’t build on. “That permeates into the lot cost and therefore makes it harder to build and it makes it more expensive to build,” Dietz said. “So when I go around, I talk to policymakers, whether it's members of Congress or state legislators, and we go through this exercise to basically say, 'Look, if you want to help housing affordability, if you want more first time buyers in the market, you need to help us build more entry-level homes. And the best way to do that is to find ways to reduce regulatory costs.'”
He said he thinks the industry is starting to see some bipartisan agreement on zoning reform, for example, building with a little bit more density and building more townhouses.
"Townhouses are about 15% single-family construction; they should probably be 20% of single-family construction," Dietz said.
The experts speaking Thursday don't expect a massive downturn.
"I really have become a believer of this notion of rolling recession," Guettabi said. "In other words, we're going to have pockets of the economy essentially correct or reset as the year goes on. I think that the regional economy is going to still outperform [the rest of the country]."
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