Biggest Problems Faced by a First Home Buyer in 2023


It’s been 10 years since I bought my first house, and that was when it was easy to buy real estate. Now, however, the market has become much more competitive and technology has played an ever greater role in the home-buying process, making it harder than ever to find affordable housing as a first-time homebuyer in 2023. Let’s take a look at what it takes to buy your first house today so you don’t get caught off guard when you go to put your bid on the home of your dreams in 2023.

Biggest Problems Faced by a First Home Buyer in 2023

Economic Instability

The current economic instability has made it more challenging for first-time homebuyers to get the best deal possible. The most recent recession has left many homes with high-interest rates, which can make buying a property more expensive than renting. With that said, many first-time homebuyers are still able to find affordable homes. In other cases, it's become necessary for buyers to purchase properties as is, without any guarantee on the condition of the house. This lack of certainty may cause buyers to reconsider their decision and instead opt for renting or another more convenient housing option. First-time homebuyers should be aware that one of the largest costs involved in purchasing a new house is down payments. 

The biggest challenge for first-time homeowners in 2018 was saving up enough money for a down payment, which usually ranges from 3% to 20% of the total value. However, since this number could potentially change depending on loan conditions, new potential homeowners should speak with financial advisors before making an offer so they know exactly how much they'll need upfront. 

In addition to having enough funds available, first-time buyers also have some obstacles when it comes to credit scores - and specifically paying off debt balances such as student loans, medical bills or credit card balances - due to tight lending standards being put into place after the 2008 financial crisis.

Student Loan Debt

Buying a home is one of the biggest investments you'll ever make. For first-time homebuyers, it's not uncommon to take on mortgage loans in excess of $200,000. If you haven't saved up for your down payment and closing costs, it may be difficult to get approved for that much debt. 

An additional concern for first-time buyers is student loan debt. With more than 44 million Americans carrying student loan debt, there are plenty of people looking to buy their first home but are unable to do so because they can't qualify for enough debt with just their income. Student Loan Hero estimates that first-time homebuyers would need an extra $2,750 in order to purchase a house worth $233,500. 

The rise in housing prices also makes buying a first home even more expensive. Housing prices have risen steadily since 2006 and as of this year have surpassed pre-recession levels. The median sale price for an existing single-family detached property is now around $250,000 according to Zillow data from January 2018. Student Loan Hero also predicts that if these trends continue homes will cost at least 30% more than what the average person earns annually by 2028 which puts homeownership out of reach for many young adults and millennials living paycheck to paycheck

The Lack of Affordable Housing

The biggest problem for first-time homebuyers is the lack of affordable housing. The median household income in the United States is $60,336, but the average cost of a house is $233,100. Homes are more expensive than they have been in decades and first-time buyers are being priced out of homeownership. Many people who want to buy their own home cannot afford to do so and live with relatives or rent from someone else instead because it's simply not possible for them to save up enough money to buy a house within 10 years. 

The result? They will never be able to build up enough equity and pass on wealth like their parents did when they bought their homes. More Challenges For First-Time Buyers: First-time homebuyers may also face challenges obtaining financing because lenders require that these individuals have excellent credit scores. Additionally, they need to demonstrate an adequate down payment and sufficient monthly income.

The Competition from Investors

Since 2007, the number of people who have been investing in real estate has surpassed the number of first-time homebuyers. In a study conducted by Trulia, they found that out of the 11 million homes bought and sold between 2011 and 2016, only 3.8% were first-time buyers. This is due to several factors such as the rise of investors buying up properties which creates more competition for first-time buyers and increased house prices (which can be attributed to low inventory). Furthermore, The National Association of Realtors' 2017 survey showed that 44% of renters would like to buy their own home but only 27% think they will be able to afford it. 

The shortage of affordable housing options continues to worsen the problem with a lack of supply. In fact, from 2010-2016 there was an 18% increase in renter households and only a 9% increase in new single-family houses being built per year on average. While there are some government programs available for first-time homebuyers such as Section 8 vouchers and HARP loans, these can still present challenges because eligibility requirements vary depending on where you live.

The Difficulty of Saving for a Down Payment

The most common challenge that first-time buyers face is saving for their down payment. The average down payment on the purchase of an existing home is 18%, but this number ranges widely depending on your location and the type of property you are looking to buy. To save money, first-time homebuyers should start with a budget so they can track their spending habits and make adjustments as necessary. 

They should also consider getting rid of unnecessary monthly expenses or asking family members for help with their down payment. First-time homebuyers may want to think about buying a preowned property instead of new construction. It may take them longer to find what they’re looking for, but it will cost less and will be easier to afford. Finally, first-time homeowners might want to look into refinancing their mortgage or taking out a smaller second mortgage from another lender to use as part of their down payment.