November 10, 2015

In Case You Missed It: A Look at Recent National Housing Policy News

Number of First-Time Home Buyers Falls to Lowest Levels in Three Decades 

Figure represents third straight annual decline and lowest percentage since 1987
First-time home buyers fell to 32% of all purchasers in 2015 from 33% last year, the third straight annual decline and the lowest percentage since 1987, according to the National Association of Realtors.
The share of U.S. homes sold to first-time buyers this year declined to its lowest level in almost three decades, raising concerns that young people are being left out of an otherwise strong housing-market recovery.  First-time buyers fell to 32% of all purchasers in 2015 from 33% last year, the third straight annual decline and the lowest percentage since 1987, according to a report released Thursday by the National Association of Realtors, a trade group.   The historical average is 40%, according to the group, which has been recording such data since 1981.

New Housing Data 

On the good news front: RealtyTrac found that homeowners who sold during the third quarter realized an average price gain of $40,658 (17 percent) from the purchase price of their property–the highest average price gain for home sellers since the third quarter of 2007.  According to RealtyTrac, the average sale price of single family homes and condos nationwide during the third quarter was $263,976, a slight 0.2 percent rise from the previous quarter and a 2.4 percent jump from the third quarter of 2014. This marked the slowest year-over-year price appreciation in any quarter since the first quarter of 2012.  But not all of the news is pleasant. On the home purchasing front, first-time homebuyers continue to be an elusive commodity. New data from the National Association of Realtors (NAR) has determined that the share of first-time buyers declined to 32 percent this year, down one percentage point from a year ago. This marks the third consecutive year of that the number of first-time buyers is shrinking, and it also marks the second-lowest share NAR began tracking these numbers in 1981 and the lowest since 1987’s 30 percent reading.

Freddie Mac issues credit-scam warning to potential homeowners

For many consumers, the prospect of buying a home can be daunting. There are various factors that go into a lender’s decision whether to extend credit or not, and a buyer, especially one with some credit issues, has to make sure that their loan application is as red-flag-free as possible. That places many potential borrowers at risk for scammers who offer quick fixes to the buyer’s credit. And, there are 3 ways they do it.  In an effort to protect as many potential homeowners as possible, Freddie Mac is issuing a warning to buyers and lenders about scams that offer the promise of a raised credit score in exchange for money.  “Who doesn't want the highest credit score possible to garner the most-favored terms?,” Freddie Mac writes on its website.

No Longer a Niche, Consumer-Direct Lenders Lead Mortgage Innovation

"You have an opportunity to gain market share if you interact with people the way they are comfortable interacting," said Bill Emerson, CEO of Quicken Loans and the new chairman of the Mortgage Bankers Association.  It wasn't long ago that the consumer-direct mortgage channel was a novelty catering to a niche segment of technology aficionados and refinance borrowers. But as consumers have increasingly embraced all manners of electronic commerce, these online lenders have seized on growing expectations for a digitally-focused and interactive experience to firmly establish their place in the industry.   In that context, the naming of Quicken Loans CEO Bill Emerson as chairman of the Mortgage Bankers Association, serves as a (possibly overdue) acknowledgment that the digital channel is transforming the mortgage business, albeit not as rapidly as it has some other retail financial services.

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