First-time homebuyers are crucial to any housing market, not least because they allow existing homeowners to move out of starter homes and into their next place, keeping the real estate cycle moving.
"First-time homebuyers are a catalyst for the rest of the market," says Cara Ameer, a Florida-based broker associate and realtor with Coldwell Banker. "They're really the domino that triggers other buyers–they have a contagion effect."
But a variety of factors are keeping homeownership out of reach for many would-be homebuyers, including student loan debt – the average 20-something has almost $30,000 of it – and the ability to rustle up enough cash for a down payment.
First-time homebuyers also face stiff competition from investors and all-cash buyers in some markets, especially because the inventory of homes for sale has been so low, as the stream of foreclosures have dried up and many homeowners remain upside down on their mortgages.
"It creates a lot of pressure for first-time homebuyers who are already constrained by a limited price range," Ameer says. "There are only so many choices, many of which may not be viable or need too much work for their budget or skill."
Still, first-time homebuyers make up almost 40 percent of the entire buyer pool, according to a recent survey by Doorsteps, an online resource that connects buyers, agents, lenders and service providers. Here are a few more stats the describe today's typical first-time homebuyer:
Location, location, location: The old real estate adage holds true with first-timers, with more house hunters willing to compromise on features of a home rather than its location. While 20 percent said they would compromise on the size of their future home, just 2 percent would on the proximity of a home to good schools.
Pinching pennies: When it comes to purchasing real estate, first-time home buyers increasingly know they can't "have it all" while staying on budget. More than 40 percent said they would cut back on luxury items to save for a home, while 35 percent said they would tighten the purse strings on entertainment spending.
Foreclosures: The nation's foreclosure crisis has taken much of the stigma out of purchasing a distressed property, with 65 percent of first-time home buyers saying they would consider making an offer on a foreclosure.