First-Time Buyers Have Never Had It This Hard. Here is What is Actually True.

The median age of a first-time homebuyer in the U.S. just hit 40. That is a record high, up from around 29 in the 1980s. Home prices are roughly 50% higher than they were before the pandemic. First-time buyers now make up only about 24% of all home sales, down from 50% in 2010.

I work with first-time buyers regularly. I want to say something clearly: this is genuinely harder than it used to be. It is not a mindset problem. It is not that younger buyers are spending too much on avocado toast. The numbers are just a lot tougher than they were a generation ago.

Inspired by: The New York Times, November 6, 2025

What is Actually Going On

A few things converged to make this market so difficult for first-time buyers:

1. The lock-in effect. Millions of existing homeowners refinanced into 2-3% rates in 2020-2021. They have no incentive to sell and give up those rates. So inventory stays low, which keeps prices elevated even when demand softens.
2. Prices ran far ahead of incomes. Home values jumped nearly 50% nationally from 2020 to 2023. Incomes did not keep pace. The gap between what people earn and what homes cost widened dramatically.
3. Rates doubled. When rates went from 3% to 7%, the monthly payment on a $600,000 home went up by roughly $1,400/month. That wiped out a lot of buyers who had been on the edge of qualifying.
4. Down payments are bigger in dollar terms. Even 10% down on a $750,000 home is $75,000. That is a lot to save, especially with rent eating up a big portion of monthly income.

What I Tell First-Time Buyers Today

I am not going to sugarcoat it. I also do not think buying is hopeless; I close loans for first-time buyers every month. Here is what I have seen work:

Get pre-approved before you do anything else. Half the people who tell me they cannot afford to buy have not actually checked. Sometimes there is more purchasing power than they expect, especially with the right loan structure or down payment assistance program.

Consider FHA. With as little as 3.5% down and more flexible credit requirements, FHA loans are still one of the best tools available for first-time buyers. The mortgage insurance adds to your monthly payment but it gets you in the door.

Look at what you can afford, not what you wish you could afford. Your first home probably will not be your dream home. That is okay. Getting into something (building equity, locking in a payment) is the move. You can upgrade later.

Do not wait for rates to hit 5%. Surveys show that 25% of buyers are holding out for sub-5% rates. That is not expected to happen anytime soon. While you wait, prices in California are not going down. If the payment works today, today might be the right time.

If you are a first-time buyer trying to figure out where you stand, I would genuinely love to help. This is one of my favorite parts of the job: taking something that feels overwhelming and breaking it down into a clear plan.

Rates shown are for illustrative purposes only and are not a commitment to lend. Actual rates depend on credit profile, loan type, property type and market conditions. Not all borrowers will qualify.