Jesse Jones: Report says first-time homebuyers face new financial challenges

SEATTLE, Wash. — First-time home buyers are in a tough spot, according to NerdWallet’s First-Time Home Buyer Affordability Report.

It says those putting a national average of eight percent down on a home face whopping monthly payments.

In Seattle, that’s nearly six thousand dollars a clip.

“Seattle is the sixth most expensive when it comes to typical list prices on homes in the second quarter. So these really high dollar markets are really difficult for first-time home buyers to catch a break”, says the report’s author, NerdWallet Senior Economist Elizabeth Renter. She studied the 50 most populous areas in the country, and according to the report, the average home price in Seattle is more than 780 thousand dollars.

And that eats up nearly 60 percent of the median income for Americans in the first-time home buyer age group, “And I don’t know too many people that are at that first-time homebuyer age that can afford six grand a month,” Renter says.

The six thousand dollars includes taxes, homeowners’ insurance, and private mortgage insurance.

For context, in Los Angeles, the share of monthly income is even higher at 115%

San Diego is at 88.

And Portland isn’t much better than Seattle at 57 percent.

Renter says, “What’s really driving this, both in Seattle and across the country, is the lack of listings. So people who own their homes don’t want to come off them. Part of that is being driven by interest rates. And so as interest rates come down, we may see inventory loosen up a little bit. But we’re in such a deficit when it comes to available homes for sale that it’s it’s going to take a while for things to get better in that regard.”

So, what are aspiring homeowners to do?

Renter says, if you’re waiting for better interest rates, work on your credit and savings, “So if first-time buyers want to sit and wait a little bit, two things are going to happen. Rates might come down a little bit and we may see inventory continue to climb. That gives them an opportunity to continue to put away some more money to increase that down payment. That also gives them an opportunity to continue to work on their credit.”

Another tip is to pare down your choices. You may not get the extra bedroom you want. But saving that cash could put you in your home faster.

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