Singles and first-time buyers stifled by lending standards
(Nov. 15, 2013) Singles and first-time buyers are being prevented from reaching their dreams of homeownership due to unnecessarily restrictive mortgage lending standards, according to the National Association of Realtors in their recent study of homebuyer profiles. This is despite the housing market showing a healthy recovery over the past two years.
The 2013 National Association of Realtors® Profile of Home Buyers and Sellers continues a long-running series of large national NAR surveys evaluating the demographics, preferences, motivations, plans and experiences of recent home buyers and sellers. The report series dates back to 1981, and results are representative of owner-occupants and do not include investors or vacation homes.
Lawrence Yun, NAR chief economist, said tight credit continues to impact home buyer households. “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,” he said. “Not seen in this survey is the elevated level of investors in recent years. The housing recovery would have been much weaker without investors, who often purchase with cash.”
The overall market share of single buyers declined from 32 percent in 2010 to 25 percent in both 2012 and 2013. In the years up through 2010, the market shares were stable, usually moving only one or two percentage points.
“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 down payment options for first-time buyers,” Yun said.
– Lauren Bunting is a licensed REALTOR®with Bunting Realty, Inc. in Berlin.