FORTUNE -- Throughout recovery of the U.S. housing market, a lot of attention has been paid to young homebuyers. Countless surveys and studies suggest the share of first-time homebuyers in their 20s and 30s has dropped off considerably, that they've been missing out as the housing market heals.
The media, including Fortune, has widely reported the problem at a time when many young people are bogged down by joblessness and large debts from student loans. Now analysts at the Federal Reserve say the decline isn't as bad as the media has made it out to be.
In a report last week, analysts at the Federal Reserve of Atlanta point to articles by the Wall Street Journal, USA Today, and Bloomberg Businessweek, which cite surveys by the National Association of Realtors (NAR), an industry group that tracks home prices and purchases. While the surveys may be right, the way the press has interpreted them is flawed, analysts write.
The media has widely reported that first-time buyers currently make up roughly 30% of all home transactions, compared with an average of roughly 40% over the past several decades. While that might be true, the figures come from different surveys reflecting varying frequencies -- whereas the 30% share comes from a monthly survey, the 40% average comes from a yearly survey. Since the two sets of numbers are distinctly different, they can't be fairly compared to one another.
More than that, a NAR survey says first-time homebuyers accounted for more than 50% of sales in 2009, when recession-era tax credits boosted first-time sales. The Fed did its own analysis and found that the tax breaks distorted the overall long-term trend of first-time buyers (from 2001 to 2012), so it's likely that their share of all home transactions may be less than housing surveys have suggested.
That's a fair point, but that still doesn't entirely explain why the share of first-time buyers has indeed dropped, even if less than previously thought. It remains to be seen how long the drop may persist and how heavily it could weigh on the housing market.
Nonetheless, if the Fed's findings are right, they prove a few bigger points: That the central bank's multi-billion dollar bond-buying program designed to spur more borrowing hasn't left first-time buyers behind the housing recovery. And yet, oddly enough, it might also suggest that the bond purchases aren't as helpful, at least for first-time buyers, as government tax credits have been.
Investor frenzy has lost steam.
FORTUNE – Sales of previously owned homes may have slowed, but don't take it as a sign that the housing recovery has hit a bump. On Monday, the National Association of Realtors reported sales fell 1.2% in June from the previous month; it warned higher home prices and mortgage rates could hit buyers in the coming months.
Sales may indeed slow, but that probably will have less to MORENin-Hai Tseng, Writer - Jul 23, 2013 11:03 AM ET
More good news for the housing market.
By Joshua Steiner, Hedgeye
FORTUNE -- The chart above shows the ratio of new home sales to total sales historically back to 1999. Currently, new home sales are running at 7.8% of total sales. From 1999 to 2005, new home sales averaged a fairly consistent 16% of total sales. The low watermark was 5.5% in May 2010.
The trend in new home sales as a MOREApr 25, 2013 12:47 PM ET
Vehicle sales are often seen as a more accurate measure of consumer sentiment than retail or home sales. They show that tax cuts don't seem to be hampering Americans yet.
FORTUNE -- Despite higher taxes and worries over government spending cuts, consumers have surprisingly held on to their optimism. In February, they bought more of almost everything, from homes to groceries to clothes.
It's easy to doubt the positive data, given MORENin-Hai Tseng, Writer - Mar 22, 2013 9:52 AM ET
As Fortune predicted last year, a robust recovery in home prices is under way.
FORTUNE -- In spring 2011 this writer penned a controversial cover story titled "The Return of Real Estate" that predicted a strong rebound in housing. At the time, prices and sales were still tumbling, and the prevailing view among economists and pundits was that the slide would drag on and on. But Fortune's contrarian forecast proved right. MOREShawn Tully, senior editor-at-large - Oct 18, 2012 5:00 AM ET
Forget stocks. Don't bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing.
From his wide-rimmed cowboy hat to his roper boots, Mike Castleman fits moviedom's image of the lanky Texas rancher. On a recent March evening, Castleman is feeding cattle biscuits to his two pet longhorn steers, Big Buddy and Little Buddy, on his 460-acre Bar Ten Creek Ranch in Dripping MOREShawn Tully, senior editor-at-large - Mar 28, 2011 5:00 AM ET
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