Young people are being shunned from housing market: study

But 2016 and 2017 data suggests that more first-time homebuyers are emerging

Miami /
Jun.June 07, 2017 03:45 PM

An estimated 3 million new homebuyers over the past decade have been shunned from the market and it could be hindering a housing market recovery, according to a new study by Genworth Mortgage Insurance that will be released Thursday.

Factors deterring young people from venturing into buying their first home include shortages in affordable housing, tighter lending standards, looming student loans, and higher rent prices, according to a report in the Wall Street Journal. Genworth performed the study by analyzing mortgage data from Fannie Mae, Freddie Mac, the Federal Housing Administration, and Veterans Affairs among other sources.

“As we’re seeing millennials age into homeownership, there’s a huge tailwind coming,” Nela Richardson, chief economist at Redfin, told the Journal.

The market averaged about 1.5 million new homebuyers per year over the past decade, a startling difference from the 1.8 million potential annually when population growth is taken into account.

According to the Census Bureau, building companies had started scaling down homes to meet the growing demand for affordable houses among first-time buyers. For the first time since 2009, median home size shrank to 2,422 square feet.

However, 2016 and 2017 data suggests that more first-time homebuyers are emerging. Last year, 2 million first-time buyers purchased homes, representing 37 percent of the market, and in 2017, they represented 38 percent of the market.

“We’ve had a very strong surge in first-time home buyers,” Genworth chief economist Tian Liu told the Journal.

Genworth calculated historical average of first-time homebuyers to be around 35 percent using data dating back to 1994. Of the first-time homebuyers, 78 percent are using low down payment loans to purchase their first dwelling.

Many of the first-time homebuyers in the study were entering their 30’s and meeting their own demands for more space for their families and young children. [WSJ] Grace Guarnieri


Related Articles

arrow_forward_ios
Ron DeSantis and Peter Thiel (Illustration by The Real Deal with Getty)
Peter Thiel on Florida real estate: “becoming like California”
Peter Thiel on Florida real estate: “becoming like California”
Affiliated Development co-founder Nick Rojo along with 9445 Fontainebleau Boulevard in Miami (left) and the Bohemian apartment project in Lake Worth Beach (right) (Getty Images, Affiliated Development, Google Maps, MSA Architects)
“Slamming on the brakes”: South Florida’s record rent hikes slow
“Slamming on the brakes”: South Florida’s record rent hikes slow
Clockwise from top left: One Sotheby’s Jorge Uribe, Compass' Ida Schwartz, Fortune International Group's Edgardo Defortuna and Royal Palm Companies' Dan Kodsi (Illustration by Kevin Rebong for The Real Deal)
Slowdown hits South Florida’s hot resi market: Here’s what that means
Slowdown hits South Florida’s hot resi market: Here’s what that means
(Illustration by The Real Deal with Getty Images)
South Florida’s June resi sales drop by double digits
South Florida’s June resi sales drop by double digits
(iStock/Illustration by The Real Deal)
Miami again ranks as nation’s least affordable housing market, followed by LA, NY
Miami again ranks as nation’s least affordable housing market, followed by LA, NY
From left: Sotheby’s Daniel de la Vega and Reagan Jefferies with Brevard County
One Sotheby’s picks up Brevard County brokerage
One Sotheby’s picks up Brevard County brokerage
US HUD Secretary Marcia Fudge (Getty, iStock)
A heavy crown: HUD secretary declares Miami “epicenter” of nation’s housing crisis
A heavy crown: HUD secretary declares Miami “epicenter” of nation’s housing crisis
10181 US Highway 98 West and 39 Sandy Dunes Circle (LoopNet)
Florida Panhandle estate sold for $25M
Florida Panhandle estate sold for $25M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...