As agents everywhere look to 2013 as the year the housing market really bounced back, one group of buyers is yet to come back.
Two recent national surveys of real estate agents suggest that first-time buyers are on the decline, their access to the housing market blocked by tight credit and eager investors.
“Today’s market is all about the availability of financing,” said Tomas Popik, Research Director for Campbell Surveys. “It’s not the interest rates.”
Roughly 3,000 agents surveyed by the National Association of Realtors from Oct. 22 to Nov. 5 reported that just 31 percent of their sales were to first-time buyers. Normally, first-time buyers represent closer to 40 percent of the market, according to the survey.
Likewise, a monthly tracking survey of about 2,500 agents, this one conducted in October by Campbell Surveys, showed the first-time buyer’s share of the market at 34.7 percent. That’s the lowest percentage recorded in the survey’s three-year history, according to Popik.
The survey results also demonstrated how heavily first-time buyers rely on loans backed by the Federal Housing Administration. These mortgage loans are attractive to first-timers with moderate incomes because the down-payment requirement is just 3.5 percent. About half of first-time buyers now use F.H.A. financing, Popik said.
But these loans are becoming more costly, which could be contributing to the drop-off in new buyers. The financially troubled agency raised its rates for mortgage insurance this year, and has announced plans to do so again next year. Although that increase will amount to only 0.1 percent of the loan amount, the higher premiums do make it harder for people already facing tight lending standards, Popik noted.