Home ownership still out of reach for many, report finds first-time home buyers at record low

WESTON, Mass. — It is one of about a dozen new home listings in Boston’s priciest suburb. But the Jonas Cutter Homestead on Route 30 has something over the other properties that entered the market after Labor Day: it’s relatively cheap.

“The house is on the market for $1,998,000 -- so about $2 million dollars,” said Jon Shore, a real estate agent with Douglas Elliman Real Estate.

The house, built in 1850, underwent a complete restoration -- but with some modern touches -- including insulated windows, central air conditioning and a simple but stunning gourmet kitchen. Shore said interest in the house has been high -- with even out-of-state buyers having a look.

The house may be a relative bargain by Weston standards, where the average listing price is knocking on $5 million. But for first-time home buyers it might appear another example of a market that seems determined to lock them out -- or maybe already has.

The National Association of Realtors reported that in 2022, first-timers made up just 26% of all home buyers -- an all-time low. And the average age of those first-timers jumped from 33 to 36 years of age -- an all-time high. What it suggests is that young adults are having an increasingly difficult time entering the real estate market.

Shore, who specializes in Metrowest listings, said part of the problem in Massachusetts is a lack of listings.

“Inventory is very low, particularly in Weston, Wellesley and the Western suburbs,” he said.

It’s also low in more affordable Boston suburbs, such as Milford, with just 18 listings, Bellingham, with 21, Norwood, with 25 and Holliston, with 16. And these communities, while more affordable, are far from cheap. In Milford, for example, a 50-year-old raised ranch in decent condition is listed at $525,000.  New-construction condos in Bellingham are priced close to $600,000. And a raised ranch in Norwood, built in 1960, has an asking price of nearly $700,000.

Nationally, the average home price is down somewhat to $416,000. But that would still require a down payment of between $20,000 and $80,000 -- a sum difficult to scrape together for many young adults -- especially with student loan payments set to return from their pandemic hiatus.

Searching for a home can be a lengthy process. And it is getting longer. The NAR reports that search times increased, on average, two weeks from 2021 to 2022, with most home buyers taking 10 weeks to find a suitable property.

Shore recommends knowing what you want and grabbing it when it comes -- because the competition for property is high. Working with a realtor, he said, can give you insight into properties that are ‘sub-listings’ -- that is, they are coming on the market but haven’t made it there yet.

Besides high prices and low inventory, home buyers are dealing with something else this fall: high interest rates.

“Spring and early summer, they were around five percent,” said Shore. “And a lot of buyers were waiting for interest rates to come down.”

They didn’t. In fact, Shore said, they went up another two points. That’s increased competition for properties even more -- with an increasing number of buyers paying cash. In fact, the NAR found a nine percent drop in those financing a home purchase between 2021 and 2022 -- from 87 percent to 78 percent.

In some ways, those high interest rates are perpetuating the current, discouraging real estate cycle.

“Many sellers are deciding to stay put rather than go elsewhere due to these interest hikes,” Shore said.

Staying put means inventory stays low -- and prices stay high. And there’s no immediate sign that’s going to change.

This is a developing story. Check back for updates as more information becomes available.

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