“While 2016 was an overall strong year for the Massachusetts housing market, rising prices and plummeting inventory have significantly impacted the ability of many first-time buyers to purchase a home in the Bay State,” says 2017 MAR president Paul Yorkis, president of Patriot Real Estate in Medway, MA. “The only way we can solve this problem is to produce the type of workforce housing many first-time homebuyers want and need, but can't find.”

The report notes that these market forces are impacting first-time buyers as well as sellers across the nation. “Tightened inventory is affecting the home search process of buyers,” the report states. “Due to suppressed inventory levels in many areas of the country, buyers are typically purchasing more expensive homes as prices increase. The number of weeks a buyer is searching for a home remained at 10 weeks (nationwide). Buyers continue to report the most difficult task for them in the home buying process is just finding the right home to purchase.”

The median age of the first-time homebuyer last year in Massachusetts was 33, compared to 32 years of age nationally. A total of 54% of first-time homebuyers in the state were between 25 and 34 years old, while 24% were 35-44 years old and 10% were between 18-24 years old. First-time homebuyers in Massachusetts had a median income of $82,100 compared to $72,000 among first-time homebuyers nationally.

Another impediment to residential sales is student debt. According to the study, 87% of buyers in Massachusetts financed their home purchase. A total of 97% of first-time buyers compared to 82% of repeat buyers financed their home purchases. Savings continues to be the chief source of the down payment for 76% of buyers. Of the first-time homebuyers who were saving for a down payment or saving for a home purchase and were forced to delay their home purchase, 69% cited student loans compared to 55% nationally as the chief reason.

The typical homebuyer in Massachusetts last year was 45-years old and had a median income of $97,700. Nationally, the typical buyer for the third straight year was 44 years old. The median income for that typical buyer rose to $88,500.

Massachusetts

WALTHAM, MA—While the residential sales market in Massachusetts was very strong last year, one sector that took it on the chin was first-time buyers.

According to the 2016 Massachusetts Profile of Home Buyers and Sellers study produced by the National Association of Realtors, the market share of first-time homebuyers fell to a record low 35% in 2016, down from a 41% share a year earlier.

First-time buyers are being squeezed by a combination of higher prices and low inventory, the study, which was produced for the Massachusetts Association of Realtors, theorizes. The 35% share for first-time buyers is the lowest share of first-time buyers since the Home Buyers and Sellers Profile began collecting Massachusetts data in 2003.

The State of Massachusetts was on par with the national market share for the year, which at the end of 2016 was also 35% for first-time buyers. The national share of first-time buyers rose from a 32% share registered in 2015. Massachusetts lagged the Northeast as a whole, which had a total share of 44% of first-timers in 2016.

“While 2016 was an overall strong year for the Massachusetts housing market, rising prices and plummeting inventory have significantly impacted the ability of many first-time buyers to purchase a home in the Bay State,” says 2017 MAR president Paul Yorkis, president of Patriot Real Estate in Medway, MA. “The only way we can solve this problem is to produce the type of workforce housing many first-time homebuyers want and need, but can't find.”

The report notes that these market forces are impacting first-time buyers as well as sellers across the nation. “Tightened inventory is affecting the home search process of buyers,” the report states. “Due to suppressed inventory levels in many areas of the country, buyers are typically purchasing more expensive homes as prices increase. The number of weeks a buyer is searching for a home remained at 10 weeks (nationwide). Buyers continue to report the most difficult task for them in the home buying process is just finding the right home to purchase.”

The median age of the first-time homebuyer last year in Massachusetts was 33, compared to 32 years of age nationally. A total of 54% of first-time homebuyers in the state were between 25 and 34 years old, while 24% were 35-44 years old and 10% were between 18-24 years old. First-time homebuyers in Massachusetts had a median income of $82,100 compared to $72,000 among first-time homebuyers nationally.

Another impediment to residential sales is student debt. According to the study, 87% of buyers in Massachusetts financed their home purchase. A total of 97% of first-time buyers compared to 82% of repeat buyers financed their home purchases. Savings continues to be the chief source of the down payment for 76% of buyers. Of the first-time homebuyers who were saving for a down payment or saving for a home purchase and were forced to delay their home purchase, 69% cited student loans compared to 55% nationally as the chief reason.

The typical homebuyer in Massachusetts last year was 45-years old and had a median income of $97,700. Nationally, the typical buyer for the third straight year was 44 years old. The median income for that typical buyer rose to $88,500.