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Challenging housing market attracts buyers without children and higher incomes

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Anyone buying a home right now is facing a double whammy: high prices and high interest rates. To make matters worse, there aren't that many homes on the market to choose from.

A survey conducted by mortgage giant Fannie Mae showed that 85% of Americans believe that now is a bad time to buy a home.

Nevertheless, some people are taking decisive steps. According to the National Association of Realtors' annual report, nearly one-third of home sales in the 12 months ending in June were to first-time homebuyers. A record 70% of all buyers did not have children under 18.

Lance Zaldivar bought his first home in the summer, shortly after leaving the Marine Corps. He saved money for the down payment during his last deployment to Kosovo. His fiancée, Jasmin Benitez, also had some savings working as a practicing nurse.

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"My fiancée is a bit more discerning than I am, and now I'm glad she was," says Zaldivar. "She was looking for a small yard, a bit more square footage inside the house, a place where we could grow a family."

As some medical debts disappear from Americans' credit reports, their scores are rising. VACCINES - HEALTH NEWS As some medical debts disappear from Americans' credit reports, their scores are rising. Paying upfront to secure a lower mortgage rate The couple found a three-bedroom home in Montgomery County, Texas, north of Houston, for $245,000—significantly below the national average.

Their mortgage rate will be 6.25%, but they paid extra upfront to secure a lower rate for the first two years while Zaldivar completes his bachelor's degree.

"I was very happy about that," says Zaldivar. "It eased my anxiety compared to some other interest rates I've seen."

According to Freddie Mac, average mortgage rates rose even higher in the months after Zaldivar's purchase, approaching 8% this fall and then stabilizing back to 7.5% last week.

Why the average American family's wealth grew by 37% during the pandemic ECONOMY Why the average American family's wealth grew by 37% during the pandemic Sellers holding onto their affordable homes The rise in interest rates has made homes inaccessible for many potential buyers. It has also deterred homeowners from selling and giving up cheaper mortgages. This is a significant reason why there aren't as many "For Sale" signs right now.

Christina Danlap says that when she and her husband started looking for a home this year, they didn't have much to choose from. But after three years of renting in Nashville, the couple was determined to buy.

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"We added up how much we spent on rent for three years, and I think that number was a lot scarier than the interest rates are now," she says.

Thousands of veterans are facing the loss of their foreclosure rights, and it's not their fault. The VA can help. INVESTIGATIONS Thousands of veterans are facing the loss of their foreclosure rights, and it's not their fault. The VA can help. Danlap, a freelance marketer, and her husband Eric, a construction manager, considered buying a fixer-upper but decided it was more work than they wanted. Instead, they chose a newly built home near Springfield, about 25 minutes north of Nashville.

"The whole neighborhood is still under construction. We don't even have paved roads yet," says Christina Danlap.

New builds make up a significant share of sales According to the Realtors' report, about 13% of homes sold last year were newly built, compared to 12% the previous year.

Like many successful buyers, Danlap compromised—moving further from the city center and giving up on the bonus room she hoped for. They managed to get an open floor plan, a two-car garage they wanted, and a yard for their dog, Cujo.

"The yard was necessary," says Danlap. "When he gets—what I call his zoomies—when he gets them twice a day, we just send him out there and let him get it all out."

The purchase price was just under $350,000, so the Danlaps needed about $30,000 to cover a 6% down payment and closing costs.

The down payment is the most challenging part, and the average income of homebuyers is at a record high. According to the Realtors' report, making a down payment is the biggest challenge for many first-time homebuyers, especially those burdened with high rent and student loans.

The average income of all homebuyers reached a record level: $107,000. This highlights the challenges faced by middle-income individuals when buying a home.

"The down payment, the home search—supplies are still incredibly limited. We know it's not easy for them, especially with finding affordable properties," says Jessica Lautz, deputy chief economist of the National Association of Realtors. "But these homebuyers somehow make it work and get in there."