December 2016 - Getting Serious About Diversity

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54 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ANALYTICS THE LATEST Two Key Segments Re- emerging Among Homebuyers First-time buyers and single women are re-entering the housing market, though today's first-time buyers are older than in years past. T he pace of home sales has risen over the last two years partly due to the re-emergence of first- time buyers and single women, two segments that had been largely absent from the homebuy- ing market prior to two years ago, according to the National Associa- tion of Realtors' (NAR's) annual Profile of Homebuyers and Sellers. The first-time buyer share reversed its course in the 2016 survey, rising to 35 percent, after three straight years of declines and after dropping to a near 30-year low of 32 percent in the 2015 survey (results represent only owner-occupied homes). According to NAR, approximately 61 percent of first-time buyers were under age 35. The median age of first-time buyers was 32 in the 2016 survey, equaling the highest in the NAR survey's 35-year history set back in 2006. The average annual income of first-time homebuyers was $72,000, approximately a 4 percent increase from last year. "Young adults are settling down and deciding to buy a home after what was likely a turbulent begin - ning to their adult life and career following the Great Recession," NAR Chief Economist Lawrence Yun said. "Demand increased over the past year because of a robust job market for those with a col- lege degree and renter fatigue at a time when homeowners continue to see their equity rise. These factors were why more first-time buyers (67 percent) said a desire to own a home of their own was the primary reason for their purchase (64 percent in 2015; 53 percent in 2014)." While the rise in first-time buyer share is encouraging, the 35 percent reported for 2016 is still well below historical averages. The long-term average of first-time buyers over the survey's history is 40 percent. The homeowner - ship rate for 18- to -35-year-olds is still hovering near its historic low due to several factors, mainly home price appreciation outpacing wages in many markets, difficulty of saving for a down payment as rents rise, and student loan debt. "First-timers' ability to enter the market more convincingly over the next year greatly depends on supply improvements at the lower end of the market and if wages can finally awaken from their sluggish pace of growth," Yun said. As in year's past, married couples once again made up the largest share of buyers (66 percent) and had the highest income ($99,200). However, the survey revealed that single women made up more of the buyer pie than in recent years, based on household composition. After falling to 15 per - cent of buyers a year ago, which tied the lowest share since 2002, single females represented 17 per- cent of total purchases, the highest level since 2011 at 18 percent. "Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent)," Yun said. "Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women." The median repeat buyer age was 53, up from 52 last year, and the median income was $98,000, down slightly from last year ($98,700). According to the NAR, down payment sizes remained largely unchanged from last year (6 percent for first-time buyers and 14 percent for repeat buyers). Approximately 59 percent of buyers financed their loan with a conventional mortgage, and one third of first-time buyers (33 percent) used a low-down pay - ment FHA-insured mortgage—a number that has fallen signifi- cantly in the last five years (from 54 percent in 2011). Approximately 93,000 recent homebuyers answered the NAR's 132-question survey on preferences, motivations, plans, experiences, and demographics in July 2016. "Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the Great Recession." — Lawrence Yun, Chief Economist, NAR

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