First-Time Homebuyers Are Scarce, but More Are Paying Cash
By Emma Carter
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Intro
First-time buyers make up a small share of homebuyers, but a record share of them are paying the full price in cash, according to a new report.
Vocabulary
| Word | Part of speech | Meaning | Example |
|---|---|---|---|
| median noun | noun | Meaning: The middle value in a group of numbers when they are put in order. | Example: The median age of the group was 35. |
| inheritance noun | noun | Meaning: Money or property that someone receives from a person who has died. | Example: She used her inheritance to pay for a small apartment. |
| assets noun | noun | Meaning: Things of value that a person owns, such as money or property. | Example: He sold some assets to pay for his education. |
| upfront adverb | adverb | Meaning: At the beginning, before the rest of a payment is made. | Example: They paid half the cost upfront and the rest later. |
| mortgage noun | noun | Meaning: A loan used to buy a home, usually paid back over many years. | Example: They got a mortgage to buy their first home. |
The story
First-time buyers made up 22% of homebuyers, a share close to a record low, according to a new report from the National Association of Realtors. At the same time, a record share of first-time buyers paid the full price of their home in cash. One in 10 did so, the highest level since the group began collecting this data in 2003.
The report says first-time buyers are older than before. Their median age was 40, a record high. Among buyers who used a mortgage, the median age was 38. For those who paid cash, it was 54.
Inherited wealth played a larger role for cash buyers. They were more likely than buyers who financed their homes to use an inheritance or money from selling inherited property. The report says 28% of cash buyers used an inheritance, while 21% used money from selling inherited property.
For first-time buyers overall, personal savings remained the largest source of down payment money. More buyers used assets such as retirement accounts, stocks, or cryptocurrency than received financial help from family or friends. A down payment is the money a buyer pays upfront; a mortgage is a loan used to pay the rest of a home's price.
The report also describes a growing gap between people who save on their own but cannot afford a home and people who eventually receive wealth from family. It suggests inheritances may become more common among first-time buyers in coming years as older generations age. For buyers who have the money, paying cash can avoid the need for a mortgage. But the figures show that many first-time buyers remain unable to enter the housing market, while some depend on family wealth to make a purchase.
Warm-up questions
- What might make it difficult for a person to buy a first home?
- What are some ways people might get the money for a home purchase?
Comprehension questions
- What share of homebuyers were first-time buyers?
- What was the median age of first-time buyers?
- How did cash buyers differ from buyers who used a mortgage in their median age?
- What was the largest source of down payment money for first-time buyers overall?
- What does the report suggest may happen in coming years?
Opinion questions
- Do you think people should receive help from family when buying a home? Why or why not?
- Would you prefer to save for a home for a long time or buy sooner with a mortgage? Explain.
Further discussion
- How might a growing gap in family wealth affect people who want to buy a home?
- What could make it easier for people to save for a down payment?
Writing prompt
- Write a short paragraph about one challenge first-time homebuyers may face and one possible way to address it.
