Andrea Riquier from Real Estate News gives us a fresh update on first-time homebuyers.
How many first-time homebuyers are there in the housing market?
That’s an important question. A smaller share of first-timers suggests that the market may be too competitive or too expensive – and ultimately not very inclusive. A bigger share suggests market conditions may be a bit easier, and that more Americans are getting a shot at attaining upward mobility.
But it is surprisingly difficult to pin down exactly how many home purchases go to first-timers, and a new set of research reports from the New York Fed attempts to correct that.
The National Association of Realtors, the trade group that’s responsible for what may be the best-known measurements of the issue, publishes an annual survey of characteristics of home buyers and sellers. NAR conducts that survey on a monthly basis and those results are tracked in their existing-home sales release.
Another measure comes from the mortgage industry. Within the mounds of paperwork any borrower must fill out, there’s one form known as the Uniform Residential Loan Application. It asks whether the borrower has had “an ownership interest in a property in the last three years.”
The inclusion of that question in the application process dates back to 1992 when Congress passed legislation known as the Federal Housing Enterprises Financial Safety and Soundness Act. The legislation established a new regulator for Fannie Mae and Freddie Mac, and also set out targets for the two mortgage giants to ensure they were serving all would-be home buyers equally and fairly.
Many analysts who focus on the role of Fannie and Freddie in contributing to the housing bubble of the last decade point to the affordable housing goals of the 1992 legislation as the beginning of that slippery slope. Other analysts, of course, focus more on the role of lenders or believe that there’s blame to go around.
Putting that thorny question to the side for a moment, the historic accident of the URLA’s treatment of a “first-time buyer” as someone who hasn’t owned property within the past three years is still with us.
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