First-time homebuyers:

“Most people who are trying to buy their first home are feeling the pinch of high home prices and financing costs relative to income,” said Rodziewicz, one of the authors. “Our analysis speaks to the challenges those households may be facing, providing a brief historical perspective on how affordability has changed and some of the factors that underpin those changes (house prices, income and financing costs). Rather than thinking only about house prices, it is important to think about incomes as well.”

The number of first-time homebuyers shrank to a historic low of 24% of all buyers in 2024, down from 32% the previous year, according to the National Association of Realtors. Meanwhile, the typical age of a first-time homebuyer hit an all-time high of 38 years, compared with 35 the previous year. By comparison, the typical first-time homebuyer in the 1980s was a person in their late 20s. 

A difficult climate

For a combination of reasons, it has been a challenging time to buy a home. 

Melanie Thompson is a housing education coordinator for NeighborWorks and said the organization has seen a big drop in eligible clients because of higher home prices, lack of homes for sale and higher interest rates. 

“Last year we educated 186 clients and were able to help 29 households with down-payment and rehab assistance,” she explained. “In past years prior to the pandemic, we were helping, on average, closer to 50-70 households a year with down-payment assistance. But so much has happened in the past five years that we are still figuring out what a new normal is.” 

Another potential roadblock for first-time homebuyers is the rising cost of home insurance. According to Insurance.com, insurance premiums increased by an average of 10.4 percent in 2024. Homeowners in Nebraska saw the largest jump overall, at 22.7%. The increase in Missouri was 16.4 %. The increases in Colorado and Kansas were 13%, and the increase in Oklahoma was just below 10%. 

“One less talked about aspect of affordability is homeowners’ insurance and how rates have significantly increased over the past year or two and will likely continue to increase due to more frequent natural disasters and severe weather events in the future,” said Dillon Murman of NeighborWorks. 

New home, more room

With the birth of their second child approaching, Zac and Marie Waldroup of Broken Arrow, Oklahoma, knew their 1,100-square-foot apartment would not be sufficient for raising a growing family. So, like many others who want to live the American dream of home ownership, they set out to purchase a house. They were able to get assistance on a down payment from REI Oklahoma Inc. and the Tonkawa Tribe of Oklahoma.

“We found a house that had just come back on the market after another buyer fell through,” said Waldroup, 29.

“It was a humble three-bed, one-and-a-half bath ranch style house built in 1959. It was far from being the ‘McMansions’ I passed every day on the way to work, but it would do for our little family for now.”

REI Oklahoma provides down-payment and closing-cost assistance to eligible homebuyers through its bank lending partners. It also provides homebuyer education. Dena Sherrill, REI’s vice president of housing, said some of the challenges the organization faces are higher interest rates, low inventory and investors purchasing up inventory that otherwise could be available for first-time homebuyers.

“We are here to help and are working to expand our housing programs to provide lending to builders, Low-Income Housing Tax Credit projects, and workforce housing,” Sherrill said. 

Waldroup added, “Although our income was just over the limit for OHFA (the Oklahoma Housing Finance Agency), we were well within the limits for REI’s program. All-in-all, REI would completely cover the down payment and half of the closing costs. Marie and I were stunned.”

For others starting the homebuying process, Waldroup advises buyers to do their own research, keep good records and live within their means, even if it means buying a house that is far from perfect. 

“It’s not meant to be a forever home,” he said. “Although it may work for others, it’s more important to start building equity in something we could rent or sell later on when we are looking to expand our family and need more space.”