Rental prices are sky-high. Last week, I rented a SanMo beach-adjacent 1BR/1BA 849 sq.ft. condo for $6,300 mo.–paid a year in advance. Conventional wisdom is, “Why pay someone else’s mortgage?” First-time buyers are heeding that advice and are rushing to buy homes after a decade on the sidelines. Tracking home sales to a particular age group is hard, but a series of data points form a mosaic of a generation of younger people ready to buy: The number of new-owner households was double the number of new-renter households in 2017’s first quarter, the share of first-time buyers is creeping back toward the historical average, and mortgages for first-timers are on the ascent.
Another indicator: In the 1st quarter of 2017, 31% of the speculative homes built by major CA builders were smaller than 2,250 sq.ft., indicating they were in the starter-home range. That is up from 27% a year ago and up 24% over 2015’s inventory.
The return of first-time buyers is a somewhat astonishing statistic: They have accounted for 42% of buyers this year, up from 38% in 2015 and 31% at the lowest point during the recent housing cycle in 2011, according to Fannie Mae, which defines first-time buyers as anyone who hasn’t owned a home in the past three years.