First-Time Home Buyers More Likely to Buy Condos

By Sally Deneen

First-time home buyers are snagging condominiums at a faster rate than in the past and they're buying homes closer to mid-market value instead of traditional starter homes, according to a report. They're also putting less money down – about 10 percent instead of the 20 percent down payment typically made as recently as 2012.

"While their income hasn't risen much, first-time home buyers' tastes have," Cody Fuller, an economic analyst at Zillow, wrote in a national report. He noted that homes are more expensive in real terms, with the typical home bought by first-time buyers costing about $140,000 – up from $113,000 in the late 1990s.

Increasingly, first-time buyers are choosing condos: The share of condos bought by first-time buyers has risen to 42 percent, from 28 percent in 2001, Fuller found. Meanwhile, the share of single-family homes bought by first-timers fell from 71 percent to 58 percent.

"First-time home buyers today are typically older, spend more time renting prior to buying and are less likely to be married than in prior years," Fuller found. Their median income – $54,340 – has remained roughly the same since at least the 1970s (in inflation-adjusted terms), give or take a few thousand dollars, he noted.

In Philadelphia, the median sale price of condos and co-ops was $127,000 in February, after declining from $155,000 in July, according to Zillow data. Among single-family homes, the median sale price was $178,000 in February, dropping from the most recent high of $185,000 in October.

The top four priciest homes on the market in Philadelphia recently were all condos or townhomes, according to Zillow. The priciest: A full-floor, 4,166-square-foot condo with direct elevator access at 1706 Rittenhouse Square offered at $6.2 million. Its estimated monthly mortgage: $21,986.