First-time homebuyers purchased half of all homes that were sold from July 2009 to June 2010, according to an annual survey of buyers and sellers conducted by the ""National Association of Realtors"":http://www.realtor.org (NAR).
That's up from 47 percent in the previous 12-month period, and the highest share of first-time homebuyers in the history of NAR's study, which dates back to 1981. The previous cyclical high for first-time buyers was 44 percent in 1991.
The trade group attributed its findings to the success of the federal government's homebuyer tax credits that began in 2009. Ninety-three percent of first-time buyers during the July 2009-June 2010 period used the first-time buyer tax credit, according to NAR.
Fifty-six percent of entry level buyers financed their purchase with a ""Federal Housing Administration"":http://www.fha.gov (FHA) loan, while another 7 percent used the ""Veterans Affairs"":http://va.gov (VA) loan program.
Forty-two percent said financing their first home was more difficult than expected and 9 percent had been rejected by a lender.
NAR's profile shows the median age of first-time buyers was 30 and the median income was $59,900. The typical first-time buyer purchased a 1,540 square foot home costing $152,000. Ninety-five percent chose a fixed-rate mortgage.
First-time buyers who made a down payment used a variety of sources: 74 percent used savings, 27 percent received a gift from a friend or relative, and 9 percent received a loan from someone they knew. Eight percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds.[COLUMN_BREAK]
The lion's share of buyers Ã¢â‚¬" both first-timers and previous homeowners Ã¢â‚¬" view their home as a good investment, according to Paul Bishop, NAR's VP of research.
""Eighty-five percent of recent homebuyers see their home as a good investment, and nearly half think that investment is better than stocks,"" he said.
""Even with the turmoil created by the housing boom and bust, this indicates the long-term view of homeownership as a fundamental goal and value remains sound,"" Bishop said.
But NAR says it's concerned that today's credit policy restrictions are locking responsible borrowers out of a sustainable model for homeownership. The trade group issued an announcement last week urging the mortgage lending industry to reassess and amend their policies so more qualified homebuyers can become homeowners.
""Fannie Mae"":http://www.fanniemae.com, ""Freddie Mac"":http://www.freddiemac.com, and FHA currently account for more than 90 percent of the mortgage market.
NAR says lenders refuse to make loans unless FHA will insure them or the GSEs will buy them. However stricter underwriting rules from the government agencies eliminate many buyers with credit scores as high as 750, and lenders are imposing credit overlays of their own, restricting the availability of credit, according to the trade group.
""Under current practices, many would-be homebuyers who could responsibly, affordably become home owners are unable to do so,"" said 2010 NAR President Vicki Cox Golder. ""NAR wants to ensure that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.""
The organization has vowed to increase mortgage lending to qualified borrowers, and as part of that policy, has begun developing educational materials for Realtors and consumers about credit issues, including the importance of good credit, lender credit policies, and how to find a fair and affordable mortgage.
NAR says it also plans to work with FHA, the GSEs, private lenders, and federal regulators to encourage them to assess their credit policies on a regular basis, and will urge them to re-evaluate their policies regarding which homeowners can qualify for loan modifications, short sales, or deeds-in-lieu of foreclosure to help more borrowers keep their homes or rebuild their credit.