Effects of inflation reduced the number of first-time home buyers to 18 percent of the market in 1979, according to a homeownership study recently published by the U.S. League of Savings Associations.
The 1979 market share represents a 50 percent drop from the number of first-time buyers in 1977. First-time buyers were hardest hit by inflationary economic conditions. However, repeat buyers, who were able to use their accumulated equity, increased their market share from 64 percent in 1977 to 82 percent in 1979.
Nationwide, the median price of a home was $58,000 for the typical buyer in 1979, up 32 percent from the 1977 median purchase price of $44,000. The percentage of homes purchased for less than $50,000 for the typical buyer in 1979, up 32 percent from the 1977 median purchase price of $44,000. The percentage of homes purchased for less than $50,000 dropped considerably, from 62 percent in 1977 to 38 percent in 1979. Homes purchased at a price greater than $70,000 rose from 15 percent in 1977 to 33 percent in 1979.
First-time buyers in 1979 opted for older, less expensive homes. According to the survey, the typical first-time buyer purchased a home built 18 years ago and 35 percent purchased homes built more than 25 years ago.
Condominiums were purchased by 11 percent of all home buyers nationwide, the study found. The percentage of condominum purchases was greatest in the West and in the Northeast.
While inflation boosted the price of houses by nearly a third between 1977 and 1979, it increased the ancillary costs of homeownership even more.
Since higher home prices made it necessary for home buyers to borrow a larger percentage of the purchase price in 1979, higher loan-to-value ratio mortgages became more popular.
A copy of the complete study of home buying characteristics can be obtained for $10 from the U.S. League of Savings Associations, 111 E. Wacker Drive, Chicago, Ill. 60601.