Characteristics of First-Time Buyers

The New York Federal Reserve Bank recently tracked the characteristics of first-time homebuyers. This is what the NY Fed learned:

1. 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.
2. 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.
   1. In 2000, first-time buyers had an average origination mortgage balance of $117,000 while repeat buyers had an average balance of $143,000.
   2. In 2016, first-time buyers had an average origination mortgage balance of $213,000 while repeat buyers had an average balance of $273,000.
3. First-time buyers traditionally have lower credit scores than repeat buyers.
   705. In 2000, first time buyers had an average credit score of 670 while repeat buyers had an average credit score of 705.
   706. In 2016, there was a 37-point difference in credit scores between first-time buyers and repeat buyers.
   707. These point differences in credit scores between first-timers and repeat buyers have remained relatively unchanged over the years.
4. Currently, first-time buyers have smaller student loan balances than repeat buyers.
   1. In 2000, first-timers and repeat buyers both had student loan balances of approximately $13,000.
   2. In 2016, first-time buyers had student loan balances averaging at $29,000 while repeat buyers had student loan balances averaging at $42,000.
5. First-time buyers are getting younger every year.
   37. In 2000, the average age of a first-time buyer was 37.9 and in 2016, first-timers averaged 35.4 years old.
   38. Repeat buyers, however, are getting a bit older.
       44. In 2000, repeat buyers averaged 44.7 years old.
       45. In 2016, repeaters averaged 47.5 years old.
   39. First-time buyers tend to purchase homes in cheaper neighborhoods than do repeat buyers.
       1. 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