Campbell/Inside Mortgage Finance HousingPulseTracking survey, the first-time homebuyer share for home purchases was found to be 34.7 percent in October. The figure is a decrease from 37.1 percent in June and the lowest share in the survey’s three-year history.
The decrease coincides with a significant rise in purchases for non-distressed properties.
HousingPulse data revealed the share of purchases for non-distressed properties rose to 64.7 percent in October, an increase from 55.7 percent in February. The October share for non-distressed property purchases was also the highest level HousingPulse has recorded.
The share of non-distressed property home purchases from first-time homebuyers is down to 33.6 percent in October from 38.7 percent in June.
The survey highlighted two key factors to explain the decrease in non-distressed property purchases from first-time homebuyers.
One has to do with higher prices for homes that are not in distress.
The second reason is the lack of available financing for first-time homebuyers. The lack of options leave many first-time homebuyers dependent on FHA for financing since FHA loans require a lower downpayment and have less strict underwriting requirements.
However, changes earlier this year added to the cost of obtaining an FHA loan and the cost is expected to increase further.
“Fifty percent of first-time homebuyers use FHA financing, but FHA insurance premiums are increasing and underwriting is becoming more strict,” said Thomas Popik, research director for Campbell Surveys. “Private mortgage insurance has started to fill the gap, but the long-term status of private mortgage insurance is in question pending the publication of the Qualified Residential Mortgage regulation resulting from Dodd-Frank.”
The survey involves responses from about 2,500 real estate agents across the country.
Author Bio: Rob Alley earned a bachelors degree at Virginia Tech, in Blacksburg, VA in Biology. Rob Alley consults with homeowners regarding Real Estate transactions and speciliazes in listing and selling Charlottesville Real Estate. Realtor/Owner of Virginia Real Estate Solutions at RE/MAX Assured Properties
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