First-time Buyers Are Dominating the Real Estate Market

June 12, 2017

First-time Buyers Are Dominating the Real Estate Market

The share of first-time home buyers continues to rise, according to recent figures from the Urban Institute’s Housing Finance Policy Center.

The May Chartbook reports 47.1 percent of all GSE purchase loans were first-time buyers in February, while a whopping 82 percent of FHA loans came from first-timers. When combined about 60 percent of all purchase loans for February were from first-time buyers, just below the 2009 peak of 63 percent.

For the first time in 10 years, the creation of new owner households outpaced new renter households.

The Chartbook attributed the rise to an “improving economy, falling unemployment and rising household formation and income.” An increase in new home construction, particularly that of smaller, less expensive homes, has also helped spur first-time buyer growth.

“Data suggests that home builders are not only building more homes, but are also more inclined to build smaller, less expensive homes, which are more likely than larger homes to meet the limited budgets of first-time home buyers,” according to the Chartbook.

But while first-time buyers are more common than in years past, they’re also less creditworthy, according to the Chartbook. The average credit score of a first-time GSE borrower is 739.7 and for an FHA loan, it’s 676.9. The worsened credit, coupled with lighter FHA credit availability, could mean many prospective home buyers are getting shut out of the market.

“Recent trends in household formation and construction activity are no doubt very positive developments, especially if sustained into the future,” the Chartbook reported. “But if we are to bring more first time home buyers into the market, credit availability will need to do its part as well.”

Other highlights of the May Chartbook showed that originator profitability is down, hitting its lowest point since 2016, and that serious delinquencies are on the decline. Only 1.37 percent of loans were 90 or more day delinquent for the quarter.

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Brent Boltz Keller Williams Realty 

DRE# 0194450

4700 Spring St, La Mesa, CA 91942

(619) 504-5904