Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Why the Housing Market Recovery is Bypassing Young Buyers

Housing-Market / US Housing Jul 29, 2013 - 08:56 PM GMT

By: Money_Morning

Housing-Market

Gary Gately writes: Think of the housing market as a ladder with first-time homebuyers at the bottom and homeowners on the upper rungs, with homes priced higher as you proceed upward.

The first-time homebuyers make it possible for those in the lower-priced homes to sell and move up to costlier homes, which in turn enables the sellers of those homes to move up to costlier homes - and so on.


But amid the housing market recovery - sales of new and existing homes are up and prices have been rising - many first-time buyers are being shut out of the market.

And that has far-reaching implications for the market as a whole, given the role those first-timers play in creating demand from the bottom of the ladder.

"They're the first rung of the ladder," Douglas Duncan, senior vice president and chief economist at Fannie Mae, told Money Morning.

"Once you buy a house, the people who are intending to move up have to be able to sell to someone, and typically they might be selling to a first-time homebuyer, so if there are fewer first-time homebuyers, it makes it harder to move up the ladder."

Why Prospective Buyers are Shut Out of the Housing Market Recovery

The proportion of first-time buyers in the housing market has declined markedly amid the housing market recovery.

Over the past 30 years, first-time buyers accounted for an average of 40% of home sales. But over the past year, they have accounted for just 30% of sales.

Prospective first-time homebuyers, traditionally couples in their late 20s and 30s, lag behind in the housing market recovery for several reasons.

With tight lending standards, it's difficult for would-be first-time buyers to get loans, particularly given many don't have high credit ratings, Lawrence Yun, chief economist at the National Association of Realtors, told Money Morning. Yun said would-be buyers also are more likely than other buyers to be unemployed or underemployed and to be saddled with high student loan debt.

The NAR's Confidence Index shows that between January and June, the median credit score for first-time buyers was 720, compared with 750 for repeat buyers.

Compounding the squeeze on prospective first-time buyers, prices of new and existing homes as well as mortgage rates have been on the rise.

"The higher the rates go, obviously, the less the first-time buyers can afford, especially given the mortgages where you have to put down so much money," Joel Naroff, president and chief economist of Naroff Economic Advisors Inc., told Money Morning.

"So rates become critical, especially for first-time buyers, young purchasers who are on the edge as far as qualification is concerned. That's generally the situation if you look at the group."

Naroff notes homeowners, by contrast, generally have equity and established credit.

There's also more competition for homes from investors. Cash sales, an indication of investor purchases, accounted for 31% of all sales in June and individual investors accounted for 17% of all purchases, NAR says.

Would-be young buyers have not only been shut out of the housing market recovery because they can't buy homes, many of them aren't even renting.

2.4 Million "Missing Households"

Jed Kolko, chief economist of the real estate website Trulia.com, calls these 2.4 million people between 18-34 "missing households" in the housing market recovery: Rather than forming new households, which is critical to the housing market and the economy as a whole, these young people are living with their parents or with others, Kolko says.

"Not only are young people not buying homes; they're not even renting," Kolko wrote on his blog. "Household formation is the most important indicator of the housing recovery that isn't making great strides.... Therefore, household formation is severely lagging behind the rest of the housing recovery."

That creates "pent-up demand for housing that the [housing market] recovery should unleash" eventually, Kolko writes. But for now, he writes, the housing market's missing these prospective buyers, which hinders the housing market recovery: "It could still take years before young people have built up the savings and economic security to leave the nest."

Looking to profit from the housing market recovery? Check out this report and learn about the best REIT to invest in now.

Source :http://moneymorning.com/2013/07/26/why-the-housing-market-r...

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules