RICHMOND, Va., Feb. 22, 2018 /PRNewswire/ -- Genworth
Mortgage Insurance, an operating segment of Genworth Financial,
Inc. (NYSE: GNW), today released its First-Time Homebuyer Market
Report for the fourth quarter and full year 2017. The report
aggregates all publicly-available government data into one dataset.
The below highlights are followed by analysis from Chief Economist,
Tian Liu.
Q4'17 Overview
- 505,000 single-family homes were purchased—the best fourth
quarter for first-time homebuyers since 2006—compared to 485,000
during Q4'16
- First-time homebuyers accounted for 39 percent of single-family
homes sold and 55 percent of purchase mortgages financed
- 398,000 home sales to first-time homebuyers were financed by
low down payment mortgages, the strongest fourth quarter for these
mortgage products since 2000
- 157,000 loans to first-time homebuyers were insured by private
mortgage insurance, a 22 percent increase from a year ago, and the
best fourth quarter for private mortgage insurance products on
record
FY'17 Overview
- First-time homebuyers purchased 2,070,000 new or existing
homes, a seven percent increase from 2016 and the strongest year
for the first-time homebuyer market since 2006
- However, purchase growth has declined since 2014, with 18
percent growth in 2015, and 12 percent growth in 2016, compared to
only six percent growth in 2017
- The construction of new homes priced under $250,000, a key price segment for first-time
homebuyers, declined by two percent, showing that supply of new
affordable homes still lags demand. This supply constraint is
elevating home prices and keeping many first-time homebuyers on the
sidelines
- Further to that point, sales of homes priced above $500,000 grew by 25 percent in 2017 (+21,000
units), compared to a two-percent reduction in home sales below
$250,000 (-1,000 units)
- All-cash home sales decreased by seven percent year over
year
- Purchase mortgage loans increased by five percent compared to a
two-percent growth rate of single-family home sales, driven by
first-time homebuyer demand and fewer cash sales
2018 Macro-Economic Predictions
- Improving economic conditions such as rising income and more
job openings should drive even stronger housing demand from
first-time homebuyers
- Strong first-time homebuyer demand coupled with lagging
increases in supply is expected to result in home prices continuing
to rise at their current pace; this view is contrary to many
industry forecasts
- For homebuyers, rising home prices will likely result in both
higher debt loads and larger monthly mortgage payments
- For homeowners, the lack of "move-up homes" on the market will
likely push more spending towards remodeling and repair projects,
leading many to remain in their homes for longer durations
- Tax reform is expected to have a net-positive effect for the
average family (median income, median-price home, two kids),
because while the new tax law will remove some of the benefits
previously dedicated to homeownership (lower mortgage interest
deduction limit, cap for sales and state/local income and property
taxes), the corresponding income benefits (lower individual tax
rates, higher limits on standard deductions, and increased
child-tax credit) will outweigh the deductions for most markets.
The exception will be markets with high home prices, high income,
and high state and local taxes.
Comments from Tian Liu, Chief
Economist, Genworth Mortgage Insurance:
"The first-time homebuyer segment had one of its strongest years
on record, and we expect it to continue growing in market share and
driving the purchase market in 2018. Since 2014, the segment has
accounted for 82 percent of home purchases, but is still facing
many headwinds. Most homes built today are significantly outside of
the typical first-time homebuyer's price range ($250,000 and below). This supply shortage at the
lower end of the price curve is driving home prices higher, which
is sidelining many first-time homebuyers. We expect the growth of
new single-family homes to continue lagging demand.
Additionally, first-time homebuyers continued driving the
growing trend towards using lower down payment mortgages, recording
the most quarterly loans of this type in 18 years. This coincided
with loans backed by private mortgage insurance having one of their
best quarters on record, at 157,000 loans insured. When considering
that there are still 2,700,000 first-time homebuyers sitting on the
sidelines, we believe volume for low down payment mortgages and
privately insured loans will remain on its upward trajectory.
Declining repeat homebuyer volume continued to hinder overall
growth numbers and, for the first time since 2011, we saw a quarter
in which year-over-year demand declined. This is partially due to
the inflationary pressure on home prices, which is causing repeat
buyers to consider re-investing in their own homes rather than
paying a premium to buy. This, in turn, is delaying entry into the
market for many first-time homebuyers.
Regarding tax reform, we view the new laws as a net-positive for
first-time homebuyers, but caution that this also varies by region.
States with higher taxes will likely feel a lesser benefit than
states where the cost of living is lower. Notably, this reform also
comes at a time when the economy is already at full employment,
which could add to inflationary pressure and drive up long-term
interest rates. During the last major uptick in interest rates
between April and September 2013
(with about twice the increase), the growth of the first-time
homebuyer market slowed from 12 percent to 2 percent."
About Genworth's First-Time Homebuyer Market Report
The First-Time Homebuyer Market Report is the only economic
series measuring the number of home sales and mortgages to
first-time homebuyers covering the entire housing market. This
report provides quarterly estimates of the first-time homebuyer
market since the first quarter of 1994—spanning two housing cycles
and 24 years. It provides a historical perspective necessary to
understand today's first-time homebuyer market. It is based on a
sample size of 21 million first-time homebuyers from government
reports and industry data. By capturing the entire market over a
long period, and providing the latest market snapshot, this report
makes the first-time homebuyer market more visible to housing
industry participants and policymakers.
For access to the full report, visit:
https://miblog.genworth.com/first-time-homebuyer-market-report-02-18/.
About Genworth Financial
Genworth Financial, Inc.
(NYSE: GNW) is a Fortune 500 insurance holding company committed to
helping families achieve the dream of homeownership and address the
financial challenges of aging through its leadership positions in
mortgage insurance and long term care insurance. Headquartered
in Richmond, Virginia, Genworth
traces its roots back to 1871 and became a public company in
2004. For more information, visit genworth.com.
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Mortgage Insurance Australia Limited, separately release financial
and other information about their operations. This information can
be found at http://genworth.ca and
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SOURCE Genworth Mortgage Insurance