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.
Citigroup stands to lose the most business, but no bank is immune.
FORTUNE -- Here's yet another risk the Federal Reserve might want to consider as it exits its bond buying program: Could the growing rout in emerging markets create a financial crisis back home?
Rising interest rates in the U.S., sparked by indications that the Fed may slow its bond buying, have translated into a summer of pain for emerging markets. MOREStephen Gandel, senior editor - Sep 3, 2013 5:00 AM ET
What's most significant about the Federal Reserve's latest statement is what it did not address: tapering bond-buying and future policy guidance.
By Mohamed A. El-Erian
FORTUNE -- After the discomforting volatility of May and June, the Federal Reserve opted today for market tranquility. As a result, two (if not three) consequential decisions are now pushed to September -- raising the question of whether the current pursuit of market calm will develop MOREJul 31, 2013 2:31 PM ET
Federal Reserve Chairman Ben Bernanke tells Congress he's willing to continue loose monetary policy if necessary. But what about policy effectiveness?
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FORTUNE -- Chairman Ben Bernanke's testimony to Congress on Wednesday was a masterful attempt to make distinctions that economists rightly value but markets repeatedly blur. Expect him to continue to press them as he tries to prepare the economy for an eventual reduction in exceptional support MOREJul 17, 2013 11:59 AM ET
The Fed wants to keep long-term yields depressed, but its policies are riddling the market with risk.
FORTUNE -- Last Wednesday, at a conference in Cambridge, Mass., Ben Bernanke sought to clarify the statements that shocked the markets just three weeks earlier. This time, the Federal Reserve Chairman reassured his vast, anxious audience that his pledge to start shrinking the Fed's $85 billion in monthly purchases of long-term bonds, the latest MOREShawn Tully, senior editor-at-large - Jul 16, 2013 8:00 AM ET
The Federal Reserve may not be the big bad wolf of the bond market, despite what some say.
FORTUNE -- The last of the economy's Band-Aids are coming off. The question is how much it will hurt.
So far the answer from the bond market has been quite a lot. The yield on 10-year Treasuries spiked to 2.3% Wednesday after the Federal Reserve chairman Ben Bernanke indicated that, yes, the bond stimulus MOREStephen Gandel, senior editor - Jun 19, 2013 1:28 PM ET
Volatility is on the rise, liquidity is getting tougher in certain places, and anxiety is on the rise.
By Mohamed A. El-Erian
FORTUNE -- Those trading in many market segments would have noticed a subtle change last week: Volatility is on the rise, liquidity is getting tougher in certain places, correlations are morphing, and anxiety has increased. Moreover, rather than impact all market segments simultaneously, such dislocations seem to be cascading MOREJun 3, 2013 5:00 AM ET
Bernanke boost, though, could be short-lived.
Fortune -- Will Bernanke save bonuses? Not likely.
A number of analysts have recently upped their third quarter earnings estimates for the banks based on QE3. In mid-September, Ben Bernanke announced that the Federal Reserve will buy $40 billion worth of mortgage bonds a month until the economy recovers. Mortgage spreads, the amount banks make on home loans, have widened 0.16% since QE3 was announced, and MOREStephen Gandel, senior editor - Oct 2, 2012 2:03 PM ET
Are super-low interest rates really the answer to our economic woes, particularly at a time brimming with uncertainty and tighter lending standards?
FORTUNE – Yet again, the Fed-gasm continues.
To give the U.S. economy an extra boost, Fed policymakers on Thursday launched another round of bond purchases -- an additional $40 billion worth a month. The move would have been an unusual step for the central bank years ago, but since the MORENin-Hai Tseng, Writer - Sep 13, 2012 2:37 PM ET
Keeping interest rates near zero doesn't help much if people are too spooked to spend. A more radical solution may be in order.
By John Cassidy, contributor
FORTUNE -- Can Ben Bernanke pull the U.S. economy out of its double dip? Some investors are betting he will. The Fed's announcement that it intends to keep short-term rates close to zero until mid-2013 was widely interpreted as a signal that further action is MOREAug 22, 2011 5:00 AM ET
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