More Americans Are Choosing to Buy Than Rent
According to the latest US Census Bureau report, it turns out that for the first time since 2006, more people chose to purchase a home over renting in the first quarter of this year. There were 1.22 million new households formed in the first quarter, and of those, 854,000 were first-time buyers. That makes the home ownership rate among new households a whopping 70%!
This is great news as the rate of homeownership nationwide is currently 63.6%. The last time the rate came close to this figure was in the 2nd quarter of 2004, when it was at the all-time high of 69.2%.
Recently, a Wall Street Journal article had this to say about the reason for the jump in first-time buyers:
“The return of first-time buyers is accelerating. In all, they have accounted for 42% of buyers this year, up from 38% in 2015 and 31% at the lowest point during the recent housing cycle in 2011, according to Fannie Mae, which defines first-time buyers as anyone who hasn’t owned a home in the past three years.”
According to Trulia’s Chief Economist, Ralph McLaughlin:
“Strong renter household formation is one of the reasons why the homeownership rate has continued to drop since the onset of the housing crisis, so any sign this trend is reversing is something to take note of. We look forward to future releases of these data to determine whether this is a statistical blip or a trend.”
What does this all mean? Basically, this indicates that as more people who can buy for the first time realize their ability to buy a home without renting first, then the overall economy will benefit.
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According to a report recently released by Down Payment Resource, 65% of first-time homebuyers bought their homes with a down payment of 6% or less in January. This trend continued through all buyers who had a mortgage, as 62% made a down payment of less than 20%.
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