The New York Federal Reserve Bank recently tracked the characteristics of first-time homebuyers. This is what the NY Fed learned:
- Despite what other sources have indicated, the NY Fed suggests that the market participation of first-time buyers has remained fairly stable at an average of 45% of the overall market during the last 17 years. One point of clarification may be a distinction between the first-time and Millennial homebuyer…the two are not the same.
- Generally, first-time buyers take out smaller mortgages than repeat buyers. This makes sense since repeat buyers often base their down payment amounts (often a key determinant in the amount of a mortgage loan) on the amounts they gleaned by selling their former houses. And, this gap is widening.
- In 2000, first-time buyers had an average origination mortgage balance of $117,000 while repeat buyers had an average balance of $143,000.
- In 2016, first-time buyers had an average origination mortgage balance of $213,000 while repeat buyers had an average balance of $273,000.
- First-time buyers traditionally have lower credit scores than repeat buyers.
- In 2000, first time buyers had an average credit score of 670 while repeat buyers had an average credit score of 705.
- In 2016, there was a 37-point difference in credit scores between first-time buyers and repeat buyers.
- These point differences in credit scores between first-timers and repeat buyers have remained relatively unchanged over the years.
- Currently, first-time buyers have smaller student loan balances than repeat buyers.
- In 2000, first-timers and repeat buyers both had student loan balances of approximately $13,000.
- In 2016, first-time buyers had student loan balances averaging at $29,000 while repeat buyers had student loan balances averaging at $42,000.
- First-time buyers are getting younger every year.
- In 2000, the average age of a first-time buyer was 37.9 and in 2016, first-timers averaged 35.4 years old.
- Repeat buyers, however, are getting a bit older.
- In 2000, repeat buyers averaged 44.7 years old.
- In 2016, repeaters averaged 47.5 years old.
- First-time buyers tend to purchase homes in cheaper neighborhoods than do repeat buyers.
- Researchers looked at the average income in zip codes where buyers are buying and found a consistent difference of $9,000 in average income in neighborhoods chosen by first-time vs. repeat buyers.
Source: Mortgage Bankers Association