First-Time Buyers Hit a Record Low. Here's What That Looks Like in Coastal OC

 

NAR's 2026 report shows first-time buyers dropped to 21% of the market, the lowest share since 1981. Nationally it's a squeeze. Here, it's sharper.

Twenty-one percent.

That's the share of 2025 home purchases made by first-time buyers, according to the National Association of Realtors' 2026 Home Buyers and Sellers Generational Trends report. It's the lowest on record going back to 1981. The pre-2008 norm sat closer to 40%. We're at roughly half that now.

What the data actually says

A few numbers from the report worth knowing:

• First-time buyer share fell from 24% to 21% year over year.
• Younger millennials (ages 27 to 35) went from 71% first-time buyers last cycle to 60% this one. That's a big one-year drop.
• The median first-time buyer is now 40 years old. In the 1980s they were in their late 20s.
• Boomers remain 42% of all buyers, most of them equity-rich and moving on their own timeline.

In plain terms: the buyer pool is getting older, the people buying have usually already owned, and even the millennials who are supposed to be the engine of first-time demand are stalling out.

Why the picture is sharper on our side of the 405

The national story is hard. California is harder.

The California Association of Realtors projects the state's housing affordability index will land around 18% in 2026, meaning roughly 18% of California households can afford the state's median-priced home. Orange County's price-to-income ratio is about 12:1. Home prices here run about 172% above the national median.

Those numbers don't need much commentary. If you're earning a median OC income, the math on a median OC home does not work without either significant outside help or a significant down payment (usually both).

That help is showing up. Nationally, about a quarter of younger millennial buyers used a gift or loan from family. In our price tier, that share almost certainly skews higher. In our experience, a meaningful percentage of Costa Mesa and Newport Beach first-time purchases have family equity sitting somewhere in the capital stack.

Where first-time buyers actually land here

Not in Newport Beach, usually.

With Newport medians well into seven figures and Newport Coast higher still, most of the city is effectively a repeat-buyer market. The first-timers we see in coastal OC are landing in a few specific places:

• Eastside Costa Mesa (92627): Newport-adjacent, walkable to 17th Street, Newport-Mesa school district. Prices run below Newport Beach but carry a premium within Costa Mesa.
• Westside and Central Costa Mesa: The more approachable coastal OC entry, with a mix of mid-century single-family homes, townhomes, and condos. Recent data puts the median near $1.3M.
• Balboa Peninsula and smaller attached homes: Occasionally a way in, though inventory is tight and the product tends to be small.

The first-time buyers we meet in these pockets usually aren't "classic" first-timers. They're 35 to 42, often single or partnered without kids, frequently pooling savings with family help, and looking for something under 1,800 square feet that's livable now and improvable over time.

That's consistent with what NAR found: 25% of all buyers were single women, 14% purchased multigenerational homes, and 89% of younger buyers bought previously-owned properties rather than new builds.

The trade-offs are real

NAR found 30% of first-time buyers compromised on price, 24% on condition, and 20% on size. In coastal OC, the first-timers we work with typically compromise on all three, plus location.

Here's what that looks like in practice:

• A 1,200 to 1,500 square foot older home instead of the 1,800 they wanted.
• A condo or townhome instead of a standalone house.
• A neighborhood one zip code inland from the first-choice area.
• Some deferred maintenance they plan to address over five years.

We don't frame this as bad news. It's just the math of getting into a coastal OC home as a first-time buyer. Almost everyone who closes on one is buying something they plan to improve, not something already perfect.

If you're trying to get in, a few things worth knowing

The 2026 Orange County conforming loan limit jumped to $1,249,125. That matters. It means more first-time-buyer-range properties can be financed at conforming rates before jumbo underwriting kicks in.

Assistance programs exist and are underused. The Orange County Mortgage Assistance Program provides up to $80,000 as a deferred second mortgage for qualifying low-income first-time buyers. CalHFA's MyHome program layers on additional down payment help. Income caps apply, and they do disqualify a lot of coastal OC buyers, but they're worth a look before ruling them out.

Rates are meaningfully lower than they were 18 months ago. The 30-year fixed has spent recent months in the low 6s, with some forecasts pointing toward the high 5s later this year. That shows up in monthly payment more than in price.

Timing the market almost never pays off. Every prospective buyer who sat out 2023 and 2024 waiting for a reset is now looking at homes that appreciated in the meantime. Not a prediction, just a pattern.

If this is you

If you're trying to figure out whether a first home in Costa Mesa or Newport Beach is realistic, we're happy to walk through the actual numbers with you. Pre-approval path, assistance programs, realistic neighborhoods, what you can genuinely afford. No pressure, no pitch.

Bernice DeVries | Broker | Kastell Real Estate Group — Costa Mesa & Newport Beach