An annual study has recently been released by the National Association of Realtors and shows the impact of tighter credit restrictions on the housing market. In spite of the recovery of the last couple of years, some buyers who are financially qualified, including first-time buyers and singles, are being prevented from purchasing a home.
According to the article in RISMedia, the survey shows the impact on single home buyers, as today’s mortgage lending standards tend to favor two income households where the borrowers are likely to have higher credit scores. However the survey doesn’t highlight the part played by investors in the recovery as many often purchase property for cash.
Out of those responding to the survey, 66% of buyers were married couples, 9% were single men and 16% were single women. Some 7% were unmarried couples whereas in comparison in 2010, 58% were married, 12% were single men, and 20% were single women while the percentage of unmarried couples remained the same at 7%. The number of single buyers fell from 32% in 2010 to just 25% in 2013. Experts point out that mortgage rates are expected to gradually increase, and as such there is a need for more people to be able to access credit in order for a sustainable housing recovery. In spite of this affordability is still good in much of the US, but consumers would benefit from more access to mortgages with low down payment options and more thirty-year fixed-rate mortgages.
This latest survey shows the median age of the first-time buyer remained unchanged from last year at 31. The median income was $67,400, and the typical first-time buyer purchased a home costing $170,000. Repeat buyers typically earned $96,000 and purchased homes worth a median of $240,000.
The desire to own a home is still very strong, as 60% of first-time buyer cited this reason for purchasing a property. Out of the repeat buyers, 16% were looking for a larger home, while 12% were moving for a job, and the same percentage simply replied that they wanted to own their own home. Nearly 90% of buyers needed to finance for their purchase, with repeat buyers able to put down a 14% down payment, while first-time buyers averaged a 5% down payment. Just over three quarters of first-time buyers funded their down payment through savings, while just over a quarter used a gift from a relative. Another 7% had a loan from relatives or friends, and 8% had extracted money from a 401(k) fund.
More than half of first-time buyers said student loan expenses had delayed their purchase.