Newbie Buyers Make Smaller Down Payments

About 60 percent of first-time home buyers put down 6 percent or less on a home purchase in September. The median down payment has dropped from 6 percent to 5 percent for first-time buyers, according to the National Association of REALTORS®’ 2017 Profile of Home Buyers and Sellers.

NAR conducted a survey of non-homeowners earlier this year and found that most consumers believe you need a down payment of 10 percent or 20 percent to buy a home.

“They may not be aware that these programs are available, and they may not be taking advantage of them,” Jessica Lautz, NAR’s managing director of survey research and communications, said in the latest Down Payment Report, published by the Down Payment Resource.

Thirty-two percent of first-time buyers said they saved for more than two years to have enough to buy a home. Student loan debt was the most often cited obstacle to saving. The second most cited barrier for saving was credit card debt.

Source: “The Down Payment Report,” Down Payment Resource (November 2017)

For Those Who Held On, ‘Equity Has Returned’

Home prices surged 11.3 percent this year compared to 2012, the latest housing data by the National Association of REALTORS® shows. A rise in home prices has pulled more home owners out from underwater with the return of equity this year, NAR notes.

On NAR’s Economists’ Outlook blog, researchers explain that a borrower who bought a median-priced home in 2004 and held it for nine years – the average tenure in a home – would now have $28,114 in equity (includes combined price appreciation and paying down mortgage principle).

A home owner who purchased a median priced home in 2012 would have more than $23,000 in equity, according to NAR research.

Home owners who purchased in 2006  and 2007 – during the peak of the market – have faced the biggest falls in home prices, but NAR researchers note they are “nearly in positive equity” territory. A home owner who bought a home in 2006, for example, and owned through 2012 would have been underwater by about $28,200. However, by this year, that downfall has lessened to $4,700. Home owners who bought since 2007 are mostly in positive equity, according to NAR research.

A study released last week by CoreLogic showed that more home owners were regaining equity. About 13 percent of all homes with a mortgage remain in negative equity by the end of the third quarter, compared to 14.7 percent who stood in negative equity at the end of the second quarter.

Source: “Housing Equity 2013,” National Association of REALTORS® Economists’ Outlook Blog (Dec. 20, 2013)

The share of “First-Time Buyers Decline”

Recent home buyers are staying well within their means with notably higher incomes and modestly higher down payments than buyers in the previous year due to the restrictive mortgage credit environment, despite historically favorable housing affordability conditions, according to 2011 NATIONAL ASSOCIATION OF REALTORS®’ Profile of Home Buyers and their Sellers Housing Survey.

The share of first-time buyers declined to 37 percent in 2011 compared with 50 percent in the 2010 study.  The study shows the median age of first-time buyers was 31, and the median income was $62,400, up from $59,900 in the 2010 study. The typical first-time buyer purchased a 1,570 square foot home costing $155,000; the estimated median monthly mortgage principal and interest payment was $794.

The typical repeat buyer was 53 years old and earned $96,600, notably higher than the $87,000 median reported in the 2010 profile. Repeat buyers purchased a median 2,100 square foot home costing $219,500, with an estimated median payment of $1,006.

“Tight Credit Conditions” like this exist in your region just like ours of Placerville, CA.  

More information at: http://www.realtor.org/press_room/news_releases/2011/11/home_buyer_and_seller