Newsweek released an article on November 6th announcing that the average age of a first-time home-buyer is now 38 years old, an all-time high (1). One may assume that the increase is due to poor affordability, which is reasonable, but complicating the matter is HUD’s unique definition of a first-time home-buyer.
According to the HUD HOC Reference Guide (2), a first-time home-buyer is an individual who meets any of the following criteria:
– An individual who has had no ownership in a principal residence during the 3-year period ending on the date of purchase of the property. This includes a spouse (if either meets the above test, they are considered first-time home-buyers).
– A single parent who has only owned with a former spouse while married.
– An individual who is a displaced homemaker and has only owned with a spouse.
– An individual who has only owned a principal residence not permanently affixed to a permanent foundation in accordance with applicable regulations.
– An individual who has only owned a property that was not in compliance with state, local or model building codes and which cannot be brought into compliance for less than the cost of constructing a permanent structure.
So even though someone may have purchased their first home with a spouse in their 20’s, had kids, and divorced in their late 30’s, that individual would still qualify as a first-time home-buyer. Or if they sold their home and rented for 3 years, they’re considered a first-time home buyer again. Due to this definition, it’s not surprising that the average age has risen. Why does this matter?
There are specific national, state, and local grant programs that provide closing cost assistance, down payment assistance, and interest rate relief specifically to those who qualify as first-time home-buyers (3). In the past, it was incredibly difficult to convince sellers to accept an offer from a buyer utilizing these aid programs due to the extraordinary competition for homes. However, now the landscape has changed. Greater Phoenix has moved into a buyer’s market now and more sellers are willing to consider accepting offers utilizing these programs in the absence of multiple offers.
Buyer’s markets are rare in Greater Phoenix. While the last one was in 2022, it only lasted 4 weeks. Before that, 2014 fell just short of reaching a buyer’s market, but maintained a slight buyer’s advantage for 4 months. Before that, the last buyer’s market was in 2010, which also lasted 4 months. This time around, it depends on whether mortgage rates stagnate or decline once again. If they drop below 6.5% like they did in September and stabilize, then the market could improve for sellers again within a matter of weeks and the buyer’s market would be over.