By Tara Steele of AGBeat.com
Tight credit lingers, impacts home buyers
NAR Chief Economist, Dr. Lawrence Yun said, “Single home buyers have been suppressed for the past three years by restrictive mortgage lending standards, which favor dual-income households who are more likely to have higher credit scores.”
Mortgage interest rates will continue to rise
“Given that mortgage interest rates are expected to gradually rise, we need greater access to credit for a sounder housing recovery. Affordability conditions remain favorable in much of the country, but consumers need access to safe and sound financing, particularly the 30-year fixed-rate mortgage, and with low downpayment options for first-time buyers,” Dr. Yun said.
First time buyers
“Historically, first-time buyers are instrumental in housing recoveries because they help existing home owners sell and make a trade,” said Dr. Yun.
Who is buying?
In 2013, NAR reports that the median age of first-time buyers was 31, unchanged from 2012, and the median income was $67,400.
The typical first-time buyer purchased a 1,670 square-foot home costing $170,000, while the typical repeat buyer was 52 years old and earned $96,000.
Methods of payment
First time buyers came up with this down payment by tapping into savings (78 percent), through a gift from a friend or relative (27 percent), by selling stocks or bond (9.0 percent), tapping into their 401(k) fund (8.0 percent), or through a loan from family or friends (7.0 percent). Fully 95 percent chose a fixed-rate mortgage, 40 percent financed with a low down payment FHA mortgage, and 8.0 percent used the VA loan program with no down payment requirements.
Factors for choosing a home
NAR says the biggest factors influencing neighborhood choice were quality of the neighborhood, cited by 63 percent of buyers; convenience to jobs, 48 percent; overall affordability of homes, 40 percent; and convenience to family and friends, 38 percent. Other factors with relatively high responses included quality of the school district, 29 percent; neighborhood design, 28 percent; convenience to shopping, 26 percent; convenience to schools, 22 percent; and convenience to entertainment or leisure activities, 20 percent.
Types of homes purchased
The survey indicates that 80 percent of respondents purchased a detached single-family home, 7.0 percent a condo, 7.0 percent a townhouse or rowhouse, and 6.0 percent some other kind of housing. The typical home had three bedrooms and two bathrooms.