First Time Homebuyers Key To Rebound
First-time homebuyers are key to the housing rebound
The typical first-time homebuyer is about 30 years old, and income gains for younger households have been weaker than average. Median household income was flat from 2008 to 2012 for households aged 25 to 34 years. Growth in the median income for all households was weak but did advance by 0.8% per year. Job and income growth will accelerate and help first-time homebuyers overcome rising house prices and enter the market.
Moreover, access to mortgage credit will improve, making it easier to finance a home purchase. Credit remains tight, but mortgage lenders are expected to ease lending standards in coming months. With refinancing activity dormant given the increase in mortgage rates, lenders are eager to originate more home purchase loans. Better mortgage credit quality should also encourage more aggressive lending, as should the decline in lenders’ battles with Fannie and Freddie over representations and warranties. Lenders should also soon feel more comfortable with the recently implemented qualified mortgage rule.
Ahead: Conditions will improve for first-time buyers and their presence is necessary to compensate for waning investor demand.