Rebounding housing market leaves first-time buyers behind
The housing market is recovering, but first-time buyers are increasingly being left out of it, the Wall Street Journal reported.
Typically couples in their late 20s and early 30s, first-time buyers have accounted for about 30 percent of home sales in the past year. Over the past 30 years, these buyers represented 40 percent of sales – accounting for more than 50 percent in 2009, according to data from the National Association of Realtors, cited by the Journal.
A depressed level of first-time buyers could be a drag on the housing rebound and slow economic recovery over the long haul, according to the data.
“First-time buyers are important to get the housing market to move to a new plateau,” Steven Ricchiuto, chief economist with Mizuho Securities USA, told the Journal. “Without them, you just get stuck at a marginal recovery environment.”
First-time buyers accounted for 29 percent of existing home purchases in June, down from 32 percent at the same time a year ago. Overall, sales of existing homes fell 1.2 percent in June to a seasonally-adjusted rate of 5.08 million, according to NAR’s study, cited by the Journal.
Sharp price gains, a hallmark of the recovery in many markets, have exacerbated the common problem of financing for many first-time buyers. The demographic is likely to have more buyers who are unemployed, underemployed or who have lingering debt and weaker credit scores.
Meanwhile, no-money-down mortgages and other financial tools popular before the crisis have largely dissipated. [WSJ] – Julie Strickland