ECONversations Checking in on First- Time Home Buyers Jessica Dill, Economic Policy Analysis S pecialist February 10, 2016 For the latest news: frbatlanta.org/subscribe
First-Time Buyers Make Headlines November 3, 2014 2
Measures of First-Time Buyer Market Share First-Time Home Buyer Market Share 100% First-Time Buyer Tax Credit AHS, 12 mma, monthly 90% Campbell, monthly NAR, monthly 80% AEI, monthly NAR, annual 70% FHFA, annual 60% 50% 40% 30% 20% 10% 0% 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Sources: National Association of Realtors (NAR) Confidence Index through Dec 2015, National Association of Realtors (NAR) Profile of Home Buyers and Sellers through 2015 , Campbell/Inside Mortgage Finance HousingPulse Tracking Survey through Dec 2015, Federal Reserve Bank of Atlanta staff calculations of the Census Bureau's American Housing Survey (AHS) Public Use Microdata through Jun 2013, Federal Housing Finance Agency through 2013, American Enterprise Institute's International Center on Housing Risk through Dec 2015. See http://realestateresearch.frbatlanta.org/rer/2013/08/examining-reported-decline-in-first-time-homebuyer-share.html. 3
Snapshot of the Student Debt Landscape Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP) 4
Snapshot of the Student Debt Landscape Distribution of Student Debt for Undergraduates 2004 2012 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Public 4- Private Public 2- Private Public 4- Private Public 2- Private year non-profit year for-profit year nonprofit year for profit 4-year 4-year Source: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study 5
Are student loans sidelining young home buyers? Share with Home-Secured Debt at Age 30 Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP) See http://libertystreeteconomics.newyorkfed.org/2014/05/just-released-young-student-loan-borrowers-remained-on-the-sidelines- of-the-housing-market-in-2013.html#.VGzDW8m9Z8E. 6
Are student loans sidelining young home buyers? Homeownership Rates, by Educational Attainment and Age 50% 50% College Education, Student Loan Debt 45% 45% College Education, No College Education, Student Loan Debt 40% Student Loan Debt 40% College Education, No Student Loan Debt 35% 35% 30% 30% 25% 25% No College 20% 20% Education No Student Loan Debt* 15% 15% No College Education 10% 10% 5% 5% 0% 0% 23 24 25 26 27 28 29 30 31 32 33 34 35 2004 2005 2006 2007 2008 2009 2010 Age *Includes individuals with and without post-secondary education Source: TransUnion, LLC and National Student Clearinghouse; calculated by Mezza, Sommer, and Sherland at the Federal Reserve Board See http://www.federalreserve.gov/econresdata/notes/feds-notes/2014/student-loans-and-homeownership-trends-20141015.html. 7
Student Loan Payment-to-Income Ratio Holds Steady Monthly Payment-to-Income Ratios, 1992-2010 Notes: Based on households age 20-40 with education debt, wage income of at least $1,000, and that were making monthly payments. Source: Brookings Institute, calculations by Akers and Chingos using Board of Governor of the Federal Reserve System: Survey of Consumer Finance (SCF). See http://www.brookings.edu/research/reports/2014/06/24-student-loan-crisis-akers-chingos. 8
Fewer but Younger First-Time Buyers First-Time Home Purchases, by Birth Year 4.5% Share of Birth Year, First-Time Home Buyers peak: age 27-29 4.0% 3.5% peak: age 25 3.0% peak: age 24 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 1975 1977 1983 1985 Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors’ calculations See http://realestateresearch.frbatlanta.org/rer/2015/07/are-millennials-responsible-for-the-decline-in-first-time-home-purchases-part-2.html. 9
Fewer but Younger First-Time Buyers Number of First-Time Home Buyers, by Age Bracket 1,800,000 1,800,000 1,600,000 1,600,000 1,400,000 1,400,000 1,200,000 1,200,000 1,000,000 1,000,000 800,000 800,000 600,000 600,000 400,000 400,000 200,000 200,000 0 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 35-48 21-35 Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors’ calculations See http://realestateresearch.frbatlanta.org/rer/2015/07/are-millennials-responsible-for-the-decline-in-first-time-home-purchases-part-2.html. 10
Influence of Location/Local Economic Conditions Change in First-Time Home Buyers, by State 2001-2011 Difference 50,000 1,200 - 800 2,000 5,200 4,800 4,800 4,800 4,800 6,000 6,000 5,600 8,800 11,200 11,200 11,200 11,600 12,800 12,800 14,000 13,600 16,400 16,000 15,600 18,400 22,800 22,800 23,600 27,200 28,800 33,600 35,200 37,600 36,800 38,400 (50,000) 38,800 40,400 40,400 43,200 44,000 46,000 63,200 66,400 74,400 79,200 79,200 83,600 (100,000) 97,600 115,200 121,600 (150,000) 170,000 (200,000) (250,000) CA FL TX IL OH GA MI PA NY NC NJ VA MA MO AZ IN TN WI MN MD CO AL WA SC KY KS LA MS OR CT WV NV NM OK NH ID ME UT IA DE MT NE AK RI AR HI VT WY SD ND Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors’ calculations See http://realestateresearch.frbatlanta.org/rer/2015/05/are-millennials-responsible-for-the-decline-in-first-time-home- purchases.html. 11
Credit Availability Is Also An Important Factor Median Credit Score for First-Time Home Buyers, by Age Bracket 750 750 730 730 710 710 690 690 670 670 650 650 630 630 35-48 21-35 610 610 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors' calculations 12
Credit Availability Is Also An Important Factor Number of First-Time Home Purchases, by Credit Bracket 25-34 year olds 35-48 year olds 600,000 600,000 500,000 500,000 400,000 400,000 300,000 300,000 200,000 200,000 100,000 100,000 0 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 01 02 03 04 05 06 07 08 09 10 11 12 13 14 <610 610-710 710-780 780+ <610 610-710 710-780 780+ Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors' calculations See http://realestateresearch.frbatlanta.org/rer/2015/07/are-millennials-responsible-for-the-decline-in-first-time-home-purchases- part-2.html. 13
“Credit Box” Tightened for All Buyers Distribution of Credit Scores on Mortgage Originations 100% 75% 50% 25% 0% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Under 680 680 to 750 Over 750 Source: LPS (Lender Processing Services) Applied Analytics through October 2014 14
“Credit Box” Tightened for All Buyers Scatter Plots of FICO and DTI at Origination 100 2000 2006 2009 2014 Debt-to-Income (DTI) 0 300 900 FICO Score Source: LPS (Lender Processing Services) Applied Analytics 15
ECONversations Checking in on First- Time Home Buyers Jessica Dill, Economic Policy Analysis S pecialist February 10, 2016 For the latest news: frbatlanta.org/subscribe
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