MacroMonitor Market Trends April 2013

MacroMonitor Market Trends is a newsletter from Consumer Financial Decisions (CFD) that highlights topical news and trends of interest to you and your colleagues. If you would like more information about the topic in the newsletter or would like to discuss other ways that we can assist you in your research or marketing efforts, please contact us.

First-Time Home Buyers

Since the turn of the twenty-first century, much has been written about the short-term, long-term, and global ramifications of the US housing market's up and subsequent down. After growing slowly for decades, property values rose rapidly between 2000 and 2006 as the housing bubble inflated. When the bubble burst in 2007, home values plummeted to levels last evident in the 1990s. At the same time that housing prices were on the rise, stagnating wages and lower entry-level salaries combined to delay household formation; many first-time home buyers were priced out of the market. Even so, between 2002 and 2010, the number of first-time buyer households has remained fairly constant: 5 million to 6 million households.

First-Time Home Buyers

As the residential-housing market rebounds, it's instructive to trend the number of households that say they are likely to buy a home for the first time in the next two years. This number has declined from 10 million households before the recession to 6 million that the 2012–13 MacroMonitor reports. The gap between households that aspire to home ownership and those that realize their goal currently stands at slightly more than 1 million. Although young adults may have diminished expectations, a gradually improving economy, stabilizing home values, and historically low interest rates now converge to create a tailwind for home buyers. Looking forward, the opportunity for mortgage providers may be considerable. The past four years have, however, resulted in a number of consumer changes. For example, first-time home buyers have an increased resistance to variable-rate mortgages.

For more insights about first-time home buyers, MacroMonitor sponsors may access the Property Virgins Segment Summary available through your company's SBI/CFD landing page. Sponsors may request a full presentation about first-time home buyers, including a customized and proprietary Q&A session. You may always request Segment Summaries about other populations—for example, retirees with excess income, Asian-Americans, mutual-fund investors, debit-card users, and the Emerging Affluent. To learn more about the first-time home buyers, or for answers to questions, please contact CFD.