Checking in on First- Time Home Buyers Jessica Dill, Economic - - PowerPoint PPT Presentation

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ECONversations Checking in on First- Time Home Buyers Jessica Dill, Economic Policy Analysis S pecialist February 10, 2016 For the latest news: frbatlanta.org/subscribe First-Time Buyers Make Headlines November 3, 2014 2 Measures of

SLIDE 1

Checking in on First- Time Home Buyers

ECONversations

For the latest news: frbatlanta.org/subscribe

Jessica Dill, Economic Policy Analysis S pecialist February 10, 2016

SLIDE 2

First-Time Buyers Make Headlines

November 3, 2014

SLIDE 3

Measures of First-Time Buyer Market Share

Sources: National Association of Realtors (NAR) Confidence Index through Dec 2015, National Association of Realtors (NAR) Profile of Home Buyers and Sellers through 2015, Campbell/Inside Mortgage Finance HousingPulse Tracking Survey through Dec 2015, Federal Reserve Bank of Atlanta staff calculations of the Census Bureau's American Housing Survey (AHS) Public Use Microdata through Jun 2013, Federal Housing Finance Agency through 2013, American Enterprise Institute's International Center on Housing Risk through Dec 2015. See http://realestateresearch.frbatlanta.org/rer/2013/08/examining-reported-decline-in-first-time-homebuyer-share.html.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

First-Time Home Buyer Market Share

First-Time Buyer Tax Credit AHS, 12 mma, monthly Campbell, monthly NAR, monthly AEI, monthly NAR, annual FHFA, annual

SLIDE 4

Snapshot of the Student Debt Landscape

Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP) 4

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Snapshot of the Student Debt Landscape

0% 20% 40% 60% 80% 100% Public 4- year Private non-profit 4-year Public 2- year Private for-profit

2004

0% 20% 40% 60% 80% 100% Public 4- year Private nonprofit 4-year Public 2- year Private for profit

2012

Source: U.S. Department of Education, National Center for Education Statistics, National Postsecondary Student Aid Study

Distribution of Student Debt for Undergraduates

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Are student loans sidelining young home buyers?

Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP) See http://libertystreeteconomics.newyorkfed.org/2014/05/just-released-young-student-loan-borrowers-remained-on-the-sidelines-

f-the-housing-market-in-2013.html#.VGzDW8m9Z8E.

Share with Home-Secured Debt at Age 30

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Are student loans sidelining young home buyers?

No Student Loan Debt* College Education, Student Loan Debt No College Education College Education, No Student Loan Debt

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2004 2005 2006 2007 2008 2009 2010 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 23 24 25 26 27 28 29 30 31 32 33 34 35 Age

No College Education College Education, Student Loan Debt College Education, No Student Loan Debt *Includes individuals with and without post-secondary education Source: TransUnion, LLC and National Student Clearinghouse; calculated by Mezza, Sommer, and Sherland at the Federal Reserve Board See http://www.federalreserve.gov/econresdata/notes/feds-notes/2014/student-loans-and-homeownership-trends-20141015.html.

Homeownership Rates, by Educational Attainment and Age

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Student Loan Payment-to-Income Ratio Holds Steady

Notes: Based on households age 20-40 with education debt, wage income of at least $1,000, and that were making monthly payments. Source: Brookings Institute, calculations by Akers and Chingos using Board of Governor of the Federal Reserve System: Survey of Consumer Finance (SCF). See http://www.brookings.edu/research/reports/2014/06/24-student-loan-crisis-akers-chingos.

Monthly Payment-to-Income Ratios, 1992-2010

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Fewer but Younger First-Time Buyers

peak: age 27-29 peak: age 25 peak: age 24 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Share of Birth Year, First-Time Home Buyers 1975 1977 1983 1985

First-Time Home Purchases, by Birth Year

Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors’ calculations See http://realestateresearch.frbatlanta.org/rer/2015/07/are-millennials-responsible-for-the-decline-in-first-time-home-purchases-part-2.html.

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Fewer but Younger First-Time Buyers

200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 35-48 21-35

Number of First-Time Home Buyers, by Age Bracket

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Influence of Location/Local Economic Conditions

170,000 121,600 115,200 97,600 83,600 79,200 79,200 74,400 66,400 63,200 46,000 44,000 43,200 40,400 40,400 38,800 38,400 37,600 36,800 35,200 33,600 28,800 27,200 23,600 22,800 22,800 18,400 16,400 16,000 15,600 14,000 13,600 12,800 12,800 11,600 11,200 11,200 11,200 8,800 6,000 6,000 5,600 5,200 4,800 4,800 4,800 4,800 2,000 800 1,200

(250,000) (200,000) (150,000) (100,000) (50,000)

50,000

CA FL TX IL OH GA MI PA NY NC NJ VA MA MO AZ IN TN WI MN MD CO AL WA SC KY KS LA MS OR CT WV NV NM OK NH ID ME UT IA DE MT NE AK RI AR HI VT WY SD ND 2001-2011 Difference

Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors’ calculations

Change in First-Time Home Buyers, by State

See http://realestateresearch.frbatlanta.org/rer/2015/05/are-millennials-responsible-for-the-decline-in-first-time-home- purchases.html. 11

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Credit Availability Is Also An Important Factor

610 630 650 670 690 710 730 750 610 630 650 670 690 710 730 750 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Median Credit Score for First-Time Home Buyers, by Age Bracket

35-48 21-35

Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors' calculations 12

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Credit Availability Is Also An Important Factor

100,000 200,000 300,000 400,000 500,000 600,000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 25-34 year olds <610 610-710 710-780 780+ 100,000 200,000 300,000 400,000 500,000 600,000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 35-48 year olds <610 610-710 710-780 780+

Source: Federal Reserve Bank of New York Consumer Credit Panel (CCP), authors' calculations

Number of First-Time Home Purchases, by Credit Bracket

See http://realestateresearch.frbatlanta.org/rer/2015/07/are-millennials-responsible-for-the-decline-in-first-time-home-purchases- part-2.html. 13

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“Credit Box” Tightened for All Buyers

Source: LPS (Lender Processing Services) Applied Analytics through October 2014 0% 25% 50% 75% 100% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Distribution of Credit Scores on Mortgage Originations

Under 680 680 to 750 Over 750

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“Credit Box” Tightened for All Buyers

Source: LPS (Lender Processing Services) Applied Analytics 2000 2006 2009 2014 Debt-to-Income (DTI) 100 FICO Score 300 900

Scatter Plots of FICO and DTI at Origination