There are many factors leading to the current housing market being a rough time for first-time homebuyers. This group is already at a disadvantage from the outset, not having the ability to sell their existing home to help pay for a new one, and frequently already saddled with rent payments. In addition, first-time homebuyers tend to be lower income workers. This is further exacerbated by high home prices, low rates of construction for affordable housing, and an ongoing pandemic.
Home prices have been high for quite some time, and are continuing to climb. In a volatile market, sellers want to be sure to get as high of a return on investment as possible, and with the majority of buyers now being higher income, they can afford to raise prices. There is buyer demand at all income stages, as a result of low mortgage rates, further incentivizing price increases. However, the pandemic causing job losses for those unable to work from home, who are primarily lower-income workers, means they’re unable to take advantage of the moment. Lack of affordable housing construction also plays a part in higher prices. It’s not that we aren’t building. It’s that the construction demand currently is primarily for higher income housing, which is also preferred by builders, since high-density, low-income housing is more costly to build.