Over the past seven years, housing prices have been steadily increasing. A number of housing marketing analysts use this information to determine that first-time home buyers are slowly being squeezed out of the market due to prices reaching a point at which they are out of reach.
According to a report issued by the National Institute of Realtors (NAR) covering the number of first-time home buyers (FTHB) on both a monthly and yearly basis, the percentage of FTHB has increased by 33% rather than dropping as some pundits would have us believe. Bear in mind that the NAR uses information obtained comes solely from their members and as such doesn’t include every transaction during the reporting period.
The AEI Weighs In
At the same time, the American Enterprise Institute (AEI) also reports on the FTHB share of the market. Accordingly, the data used by the AEI is derived from mortgage applications that define a first-time home buyer as a “borrower who did not have a mortgage in place during the three preceding years.”
This means that the data used by the AEI includes those who had owned a home beyond the three-year point and had applied for a new mortgage within this same three-year period. In the report shows that the FTHB market share consisted of 57.5% of all mortgages applied for and approved in the month of August 2018. During this same period of time, the NAR reports a 31% share of the market.
And from the New York Federal Reserve
According to the latest research available from the New York Federal Reserve (NYFR) includes data showing that traditional reports covering first-time home buyers may no longer be able to accurately reflect how much FTHB are involved in the market. The NYFR collected their information by using consumer credit data to determine when a mortgage entered a consumer’s credit report.
By using this information, the AEI was able to show that the FTHB market share was actually ten percent higher than reported by the FTHB. At the same time reports issued by the National Association of Realtors were equivalent with their findings in 2010, when the NAR share dropped to the same 11 percent gap we are seeing today.
What’s It All Mean?
Unlike the beliefs of numerous pundits, who seem to think that first-time home buyers are becoming a steadily decreasing segment of the home-buying population, this is not the case. In fact, current reports show that the American Dream of buying a home is still alive and kicking for younger Americans in much the same way as it was for their parents and grandparents.
At the same time, the reports show that steadily increasing housing prices have not deterred first-time home buyers from seeking out the American Dream. Instead, many first-time home buyers are doing everything they can to save for a down payment in order to realize their dreams. If you are among those looking to buy your first home and get out of the endless renter cycle, the nation is filled with opportunities to make your dream come true.