Buying your first home is always daunting. In this economic environment, first-time buyers feel like the odds are stacked against them. Rates, home prices and even insurance costs remain elevated. However, some overlooked factors may be working in buyers’ favor.
Despite their challenges, the math says that now can be a good time for first-time homebuyers to get into the game—and resources are available to help overcome their perceived barriers.
Current Challenges
There is a list of factors keeping first-time homebuyers wary of entering the market right now, the most obvious being high home prices. While they are still rising, Newsweek says that the rate of increase is slowing down. When home prices go up, taxes also increase, adding to many buyers’ concerns.
Interest rates are still relatively high and unpredictable. By the end of June 2025, Freddie Mac data showed the average rate was 6.77%, which is still significantly higher than the low of 2.66% at the end of 2020. But this is down from a peak of 7.79% in October 2023.
Due to recent natural disasters, insurance costs are also rising, per the U.S. Department of Treasury. This is felt especially in the areas that see significant weather events, like wildfires or hurricanes.
Inventory also remains low, according to Bankrate. The lack of housing options not only limits the choices available to first-time homebuyers but also plays a role in keeping prices high, as there is insufficient supply to keep pace with demand.
All of these concerns are very valid for buyers. Saving enough for a downpayment, in addition to all the other rising costs associated with buying and owning a home, feels insurmountable.
Past Scenarios
Despite these challenges, homeownership is still one of the best ways to build wealth. Take Atlanta, for example to understand just how much wealth homeowners have built recently. The average homebuyer stays in their home about 8 years, according to The Zebra, so to get an idea of what today’s homeowner has built in that time, it’s helpful to look back to 2017.
According to data from the St Louis Fed, in 2017, at the start of Q1, the median list price for a home in the area was $269,900. By that same time in 2025, the median list price is up to $399,000. It peaked in June 2022 at $449,675. In those eight years, homeowners built almost $130,000 in equity, and buyers waiting on the sidelines lost out on this potential wealth gain.
Beyond the loss of potential equity, hopeful homebuyers face higher downpayments today. A 20% downpayment on the average home in 2017 would run buyers about $54,000. With mortgage insurance, buyers could have been in that home for less than $10,000, which is 3% down.
A 20% downpayment for today’s average home would cost buyers nearly $80,000, and a 3% downpayment with mortgage insurance would be closer to $12,000. Assuming a savings rate of 5% (slightly above the current national average), it would take a family with a median household income over 20 years to save a 20% downpayment, compared to just over 3 years to save for a 3% downpayment.
In January 2017, the average interest rate was 4.2% – contrast that with 6.91% in January of this year. Interest rates will always fluctuate, and there’s no way to predict with certainty how rates will change. However, when it comes to looking at the past, it’s indisputable that borrowers who purchased in 2018 avoided higher home prices and higher interest rates.
It’s too late to look back at the “should haves” or “would haves” for prospective first-time buyers- but today’s borrowers should consider that waiting for more favorable conditions may leave them waiting for longer than they’d like and, in the meantime, leave them missing out on building equity now.
Future Options
Knowing how the markets have historically performed, first-time buyers can look ahead with hope. Not only is the opportunity to build equity a key incentive for buyers to consider buying sooner, but there are other factors that can sweeten the deal.
Mortgage insurance removes the need to save 20% down. By putting down as little as 3%, first-time homebuyers can buy a home and start building equity sooner. Local programs also provide downpayment assistance to further reduce the financial burden for first-time buyers. Some lenders may also have additional programs and products that can help borrowers defray costs, such as home warranty rebates.
Buying that first home is always the hardest, no matter the economic conditions. However, buying a home brings many opportunities for stability, wealth building, and a host of other benefits. And while there is no guarantee of what the market will do, history suggests that borrowers waiting it out might be missing out. The sooner FTHBs get into the game, the sooner they can start realizing the benefits of homeownership.
Note: The statements in this article are solely the opinions of Young and do not necessarily reflect the views of Enact or its management.
