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First-Time Buyers Overestimate Down-Payment Size

The vast majority of Americans who don’t own a home want to purchase one in the future, although affordability is a primary concern. The down payment, however, may not be as big of a hurdle as many first-time buyers believe.

Those are a few of the key findings from the National Association of Realtors’ 2017 Aspiring Home Buyer Profile, which includes data collected from both homeowners and non-homeowners throughout 2016. Almost 90 percent of consumers who didn’t already own a home last year want to buy one at some point in the future. Similarly, 80 percent of non-homeowners believe that a real estate purchase is part of the American dream.

But optimism surrounding the timing of purchasing a home steadily deteriorated as 2016 progressed. The number of non-homeowners who thought it was a good time to make a move declined from 63 percent in the first quarter of 2016 to 55 percent in the fourth quarter. NAR notes that the West had the smallest regional percentage of non-homeowners who think that now is a good time to buy a home.

A lack of affordable homes is likely influencing that perception; in 2016, between 48 percent and 55 percent of Americans cited affordability as the main reason that they didn’t own a home. Studies regarding the impact of student debt on first-time homeownership rates have produced varying results, but NAR’s report downplays that factor, with only 39 percent of non-homeowners reporting owing student loans in the second quarter.

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(Photo: Flickr/Tax Credits)