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Paul Slack was 22 years-old when he bought his first home. That was 10 years ago in Minneapolis.
Slack, who now lives in Durham, had just finished college in Atlanta. After graduation, he returned home to Minneapolis and moved in with his parents.
The stay at his parents’ home was a short one.
“My dad came down with a list of chores he wanted me to do after I came home, and I said, ‘no sir,’” Slack joked. “That pretty much put the idea in my head that I couldn’t live at home. I could live in an apartment, or I could buy a house. My uncle always said why throw money away on rent when you can own something.”
A fast (and atypical) start at a young age
Slack turned to Zillow. He took a look at several houses before settling on one that he bought for $125,000. With $6,000 in downpayment assistance in the form of a zero-interest loan, it cost Slack a $1,000 to move into his new home.
Five years later, Slack sold the home for $250,000. He needed the hefty profit made from the sale of the home in Minneapolis to jump into the expensive and volatile Triangle housing market where the median sales price of a single-family home was $445,290 in July, according to Triangle Multiple Listing Services.
The downpayment needed to buy a home in Durham priced at $450,000 sent Slack into sticker shock.
“I could get the $450,000 house and put down $45,000,” Slack said. “I had the $45,000 to put down but I didn’t want to kill my whole savings.”
He eventually paid $434,000 for a home that required a $35,000 down payment, he said.
At 31, Slack has already owned two homes and is well ahead in the housing game. With high housing costs and rents and student loan debt, many of his contemporaries find it difficult to save enough money to make large down payments.
“The best thing I did for myself was I bought a house the first chance that I got and it didn’t matter that that house wasn’t a forever house and it didn’t matter that my girlfriend who came to live with me didn’t love the house. None of that mattered because that [house] was an asset that grew for five years and put me in a position that I would never be able to be in. That house bought this house [in Durham].”
Slack doesn’t believe he has a single friend in his age group who can afford to save $2,000 a month to put toward a down payment on a house.
“The reality is, I’m 31, people are having kids now and that takes away their ability to save — life is expensive,” Slack said. I just don’t know anybody who can save, and I talk to my friends all of the time.”
Recent data compiled by the National Association of Realtors (NAR) and shared in the Joint Center for Housing Studies of Harvard University’s State of the Nation’s Housing 2024 serve to confirm Slack’s observation. The report shows that first-time homebuyers are indeed older and wealthier than in the past. In 2023, the average age of a first-time homebuyer was 35 years-old, which was down from the record high of 36 in 2022, but well above the 30-33 range that prevailed in the 1990s. The median household income of first-time homebuyers also jumped to $95,900 in 2023 after having averaged $79,200 over the previous three years, the NAR reported.
Harris downpayment assistance proposal could be a game changer
State housing advocates and real estate agents see promise in a $25,000 downpayment assistance program for first-time homebuyers that Vice President Kamala Harris unveiled in her recent visit to North Carolina. Harris is the Democratic nominee for president.
First-time homebuyers who have paid rent on time for two years would be eligible for the downpayment assistance. Harris has not shared how she would pay for the program.
“Twenty-five thousand dollars will assist in helping making homeownership more affordable for first-time homebuyers if they’re able to leverage it with other down payment programs,” said Brenda Green, a certified housing counselor for the Choanoke Area Development Association (CADA) of NC, Inc.
CADA is private nonprofit that assist low-income individuals in Bertie, Halifax, Hertford, Martin and Northampton counties achieve self sufficiency through education, housing counseling and community development.
“We’re rural, and a lot of our residents are challenged with their credit but also just being able to locate land [to build homes on] and then with the cost of construction since the pandemic, it’s hard to be able to meet those challenges,” Green said.
Most CADA counties have very little affordable housing stock, Green said, so homebuyers more often than not must build new homes.
Kimberly Williams, a Durham real estate agent who attended Harris’ campaign rally said the downpayment assistance proposal is a step forward for affordable housing.
“There are quite a few barriers to homeownership that her plan, it will ease some of that strain that’s put on potential homebuyers,” said Williams, who served as Slack’s real estate agent.
A big problem, Williams said, is that home prices are going up, but salaries are not. According to the NAR, as of 2023, the typical mortgage downpayment for a first-time homebuyer was 8%, while the typical downpayment for a repeat homebuyer was 19 percent.
The $25,000 downpayment assistance would be a “game changer” for a first-time homebuyer who has paid rent on time for two years but could not afford to save a large amount of money for a down payment to purchase a home, Williams said.
“To save that $25,000 downpayment, it’s very tight because salaries have not increased,” Williams said. “Not only have salaries not increased but all of the other expenses and cost of living have increased, so the ability to save, it’s just not one of those things that’s happening at the rate it was years ago.”
Harris’ proposal would be a “head start” for someone who hasn’t been able to save a downpayment but has shown fiscal responsibility by paying rent on time for two years and staying current with other expenses, Williams said.
“That’s a reward to someone who wants to be a contributing member of society and who can take advantage of all of the benefits of being a homeowner,” she said.
During Harris’ campaign rally in Raleigh to unveil her economic plan, the vice president noted that as the price of housing has gone up, so has the size of downpayments. If elected president, Harris’s downpayment assistance program would be provided to more than four million people over four years
“If aspiring homeowners saved for years, it often still is not enough, so in addition, while we work on the housing shortage, my administration will provide first-time home buyers with $25,000 to help with the downpayment on a new home,” Harris said. “We can do this to help more Americans experience the pride of homeownership and the financial security that it represents and brings.”
In addition to the downpayment assistance program, Harris’ housing plan calls for:
Creating a tax incentive to encourage builders to build starter homes.
Expanding existing tax incentives.
Creating a $40 billion innovation fund that would “empower local governments to fund local solutions to build housing.”
Working with the housing industry to build three million housing units — rentals and for purchase — by the end of her first term that are affordable for middle income families.
“We will make sure those homes actually go to working- and middle-class Americans and not just investors,” Harris said. “You know some corporate landlords, some of them buy dozens if not hundreds of houses and apartments then they turn them around and rent them out at extremely high prices and it can make it impossible then for regular people to be able to buy or even rent a home.”
In a statement, Carl Harris, chairman of the National Association of Homebuilders (NABH) applauded the vice president’s downpayment assistance proposal.
While he expressed frustration that the plan makes no mention of “reducing onerous federal regulations…that…increase on the construction of a multifamily unit,” he also said, “We are pleased that the foundation of her plan calls for the construction of three million new housing units because the primary way to tackle the nation’s housing affordability crisis is to increase the nation’s housing supply.”
