This spring's single-digit mortgage rates and sunny economic outlook are attracting a bumper crop of first-time home buyers into the real estate market -- as many as 1.5 million couples and individuals nationwide, according to new industry projections.
If you happen to be one of those would-be buyers, see how you stack up against this profile: You and your spouse or co-buyer have a total household income of $37,500 a year. Slightly more than 20 percent of the down payment you're likely to make has been raised from sources other than your own personal savings. In other words, a hefty chunk of your down-payment dollars is likely to come from relatives, friends or other sources, either as a gift or a loan. If you're like the average first-time buyer, you're going to buy an existing house, not a newly constructed unit. You're going to look seriously at homes in your market for about 4 1/2 months before signing on the dotted line. You're 28 years of age, married and have 2.6 people in your household. (That is, there's a very good chance you have at least one child already.) You can figure that your forthcoming monthly mortgage payments are going to eat up 31 to 32 percent of your income -- up from the 25 percent average of the 1970s, but down significantly from the nearly 36 percent average of 1982.
Those are just some of the highlights emerging from the latest national statistical "snapshot" of first-time American home buyers. They are excerpted from the newly released annual housing trends study conducted in major metropolitan markets by Chicago Title Insurance Co. The data were based on interviews with a representative sample of purchasers in 1985, but are considered accurate for market newcomers this spring.
What jumps out of the national study are the changes in housing choices and economics that have occurred in just 36 months. Although first-time buyers in today's low-inflation market might find it hard to believe, their counterparts in 1982 bought units carrying average prices of $58,900.
A hefty 36 percent of those purchases were for condominium units, many of them in mid- and high-rise projects that swamped urban markets that year.
Today's first-time buyer, by contrast, has a far stronger appetite for traditional single-family, noncondominium units. Only one of 10 new A hefty chunk of down-payment dollars is likely to come from relatives, friends or other sources, either as a gift or a loan. purchasers went for condos in Chicago Title's latest survey. The median cost of the first-time buyers' home was $75,000, and the average monthly mortgage payment hovered just under $800.
First-time buyers in the second half of the 1980s also appear to be more selective and more efficient in their home searches than those in the early 1980s. Back in 1982, typical first-time buyers looked at fewer than 10 homes over the course of 4 1/2 months of serious searching before making up their minds, according to the study. Now they take serious looks at an average of 15 houses within the same period of time.
One factor that hasn't changed much this decade is the source of first-timers' crucial down payments. All decade long, home buyers making their first plunge have turned to relatives, friends and other sources for help with 19 to 21 percent of the down payment. On the typical $75,000 first-purchase home, the average down payment comes to 11.4 percent, or about $8,550. Back in 1982, the average first-time down payment was 15 percent, or $8,835 on a $58,900 house.
In each case, the buyers finance that up-front cash through a combination of savings (about 80 percent), relatives (10 to 11 percent) and other sources (friends, second mortgages and other techniques).
If you're feeling sheepish about turning to your parents, uncles, aunts and best friends for down-payment dollars, don't. Most other first-time buyers in the market do the same thing.
After all, what are "rich" friends or relatives really for? The 10 to 20 percent of the down payment they and other helpers contribute to successful real estate settlements nationwide makes home buying feasible for tens of thousands of renters every year.