First-Ever Report to Track the Entire First-Time Homebuyer Market

Home sales to first-time homebuyers up 11% during First Quarter 2017

By Jeff Sorg, OnlineEd Blog

(June 12, 2017)

RICHMOND, VA., June 8, 2017 – Over the past 10 years, three million first-time homebuyers have been kept out of the home purchase market, according to Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW), which recently launched its inaugural First-Time Homebuyer Market Report.

The report is unique in that it traces the first-time homebuyer market back to 1994, analyzing more than 20 million records of first-time homebuyers from mortgage origination data. It is the first report to track home sales to first-time homebuyers on a monthly basis and report at quarterly intervals, allowing for first-time homebuyer data to be compared against national housing market indicators. Additionally, it is the first report to separately identify first-time homebuyers enabled by low down payment mortgages, such as conventional mortgages with mortgage insurance coverage, FHA loans, VA loans, and USDA loans.

“Over the past three years, first-time homebuyers have accounted for 85 percent of the growth in home sales, and have become an important indicator for understanding market trends,” said Tian Liu, Chief Economist for Genworth Mortgage Insurance. “Their impact has already been felt in falling inventory and rising home prices, and we expect them to increasingly drive growth to businesses most exposed to this market segment.”

Mr. Liu continued, “Despite their growth in volume, many prospective buyers and housing market participants still mistakenly believe that a 20 percent down payment is required to qualify for a mortgage. By studying this group more closely, we hope to bring a better understanding about the many low down payment options available to help first-time homebuyers reach homeownership sooner.”

The report, which will be published quarterly, had several notable findings in its first edition:

1. During Q1 2017, first-time homebuyers bought the most single-family homes since 2005. During the first quarter of 2017, 424,000 single-family homes were sold to first-time homebuyers (38 percent of all single-family home sales), the most during that period since 2005, and an 11 percent increase from the same period in 2016.

2. From 2014-2016, first-time homebuyers drove 85 percent of the housing market’s expansion, the fastest rate ever. The surge in the first-time homebuyer market from 2014-2016 accounted for 85 percent of the expansion in the housing market. The annual increase of approximately 260,000 first-time homebuyers for two years in a row is unprecedented during the period of 1994-2016 and had a large impact on the overall housing market in both inventory and home price appreciation. 2016 was the strongest year for the first-time homebuyer market in 11 years, reporting two million first-time homebuyers, or 15 percent more than in 2015. First-Time Homebuyers accounted for 37 percent of all single family homes sold in 2016, up from 34 percent in 2015.

3. Three million missing first-time homebuyers since the Housing Crisis. The report estimates that historically 1.8 million first-time homebuyers purchased homes each year between 1994 and 2016, accounting for 35% of all single-family homes sold. Because of the housing crisis, only 1.5 million first-time homebuyers have been able to purchase homes in the last 10 years, three million fewer than the historical average. That pent-up demand among first-time homebuyers will likely lead to a surge in demand for entry-level single-family homes, low down payment mortgages, and a general uptick in homeownership. 6620 West Broad Street Richmond, VA 23230

4. Private Mortgage Insurance and FHA loans had the most first-time homebuyer market share from 2014- 2016. Private mortgage insurance and FHA loans accounted for 80 percent of the growth in the first-time homebuyer market from 2014-2016. This breaks out to 730,000 first-time homebuyers who used FHA loans, and 510,000 who used private mortgage insurance.

For access to the full report, as well as a brief fact sheet, visit: https://miblog.genworth.com/first-time-homebuyermarket-report-06-17/.

[Source: Gentworth Financial press release]

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Jeff Sorg

About the Author

Jeff Sorg is a co-founder of OnlineEd®, a Web-based vocational school founded in 1997 where he also serves as Corporate Secretary, Chief Operating Officer, and School Director. Sorg holds vocational instructor licenses in Oregon, Washington, California, and Nevada and has authored numerous pre-licensing and continuing education courses. Sorg was awarded the International Distance Education Certification Center's CDEi Designation for distance education in 2008. OnlineEd® provides real estate, mortgage broker, insurance, and contractor pre-license, post-license, continuing education, career enhancement, and professional development and designation courses over the Internet.