3 Indications of Increasing First-Time Homeownership

3 Indications of Increasing First-Time Homeownership

"Why should I pay attention to the rates of first-time homeownership?" 

Whether you're a total new kid when it comes to the housing market or a seasoned real estate vet with five homes and a yacht named after your summer cabin, you still need to read up on these rates.

When it comes to reading the economy, rates of first-time homeownership are the canary in the coal mine. They're usually a sign of the "up-and-up" or the "down-and-down" because they reflect the current level of economic confidence and indicate the energy of the housing market. If people are willing to make a major investment and begin the process of growing their wealth, something's in the air and it's not love - It's an improving economy.

The good news?

We happen to be in what looks like the "up-and-up"! Here are three recent indications of a growing first-time homeownership rate: 

1. First-Time Homebuyers Comprise 32% of the Market

According to the National Association of Realtors' Existing Home Sales Report, this is up from last year's 27%. NAR's Chief Economist, Lawrence Yun, credits this to "strong job gains among young adults, less expensive mortgage insurance, and lenders offering low downpayment programs." In the report, Yun called this sign "encouraging" and projected, "More first-time buyers are expected to enter the market in coming months, but the overall share climbing higher will depend on how fast rates and prices rise."

2. They Also Accounted for 39% of May's Home Purchases

On June 19th, the Campbell/Inside Mortgage Finance Tracking Survey showed that May 2015 brought out the largest share of first-time homeowners since May 2012. The Washington Post asserts that this growth can be attributed to changes in financing. In an interview with Tom Ropik, Research Director for Campbell Surveys, the publication found:

"The Federal Housing Administration cut its annual mortgage insurance premium rate drastically in late January. That has made 3.5 percent down payment loans affordable to first-time buyers with FICO scores and debt-to-income ratios that would trigger rejections elsewhere in the market."

Because experts project an increase in mortgage rates over the course of the year, it's easy to see why first-time homeowners are combining the currently low rates with FHA resources. 

3. The Combined FBMSI is at Its Highest Rate in 3 Years

The AEI's International Center on Housing Risk recently published the First-Time Buyer Mortgage Share and Mortgage Risk Indexes for April 2015, which included information on the Combined FBMSI, "which measures the share of first-time buyers for both government-guaranteed and private-sector mortgages." 

April 2015 presented a rate 52.2%, up from 51.2% and 51.8% in April 2014 and 2013, respectively.

If you're a potential first-time homeowner and would like to partake in these resources and rates, drop Real Group a line and check out our guide to the home buying process and the FHA's current offerings

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