There has already been lots of news on housing this week. Tomorrow, the Federal Reserve will released data on new residential sales.
Yesterday, the National Association of Realtors reported that existing home sales dipped 1.2 percent in June. The good news is that number is 15.2 percent better than where we were June of last year.
But the Wall Street Journal reports today that first-time home-buyers are still being shut out.
JEREMY HOBSON, HOST:
From NPR and WBUR Boston, I'm Jeremy Hobson. It's HERE AND NOW.
Lots of news on housing this week. Tomorrow, the Federal Reserve will release data on new home sales. Yesterday, the National Association of Realtors reported that existing home sales dipped 1.2 percent in June. The good news is that number is still 15 percent higher than a year ago. So there is some kind of housing rebound going on. But today, The Wall Street Journal reports that new home buyers are not playing a role - new home buyers. Jason Bellini is a producer and host of "The Short Answer" video series at The Wall Street Journal. He's with us now from New York. Jason, welcome back.
JASON BELLINI: Thanks, Jeremy.
HOBSON: So what's going on here? Why aren't new home buyers taking part in this housing rebound?
BELLINI: Well, Jeremy, this is a really interesting trend. In June, first-time buyers accounted for 29 percent of purchases of existing homes, and that compares with 32 percent in June a year ago. So here's what's happening. First-time buyers, they're competing for lower-price properties with investors who can often pay cash. Now, I turned to a trusted source, my mom.
BELLINI: She's a real estate agent in Phoenix, Arizona. That's a market that's experiencing one of the fiercest comebacks in the country. And last week, Pook Bellini was working with a girl in her 30s. They looked at four houses, and each time they had people walking in behind, say, like groups of three or four people walking in right behind them. The house that this woman liked the most had a contract on it the next day. This was a home that was priced in the 400s. Problem is most of the lower-price properties in Phoenix have already been purchased or are in the process of being purchased by investors and they're coming in with cash.
HOBSON: And when we talk about first-time home buyers, are we often talking about young people?
BELLINI: Generally, yes. And as - probably because older professionals were able to get into the real estate game before the financial crisis when you're able to get those no-money-down mortgages, those were so popular before the financial crisis, and that got a lot of those first-time buyers into the game, but also many of them in a whole lot of financial trouble.
Now, when we talk about younger people, on CreditKarma.com, they break down the average credit score by age bracket and 25- to 34-year-olds have an average credit score of 628. And you compare that to 45- to 54-year-olds, their average score is 646. Now, these are people who haven't necessarily bought homes but people who did buy homes between January and June. The median credit score for first-time buyers, people who succeeded in buying their first home was 720. So it really is aspirational for so many young people. Their credit scores just aren't there. Now, for repeat buyers, the average credit score was 750.
HOBSON: And, I guess, you know, if you're young and you don't have a good credit score, that's probably because of lack of credit history rather than that you've done something wrong. But what are the implications of all of this? If young people, if first-time home buyers aren't getting into the market now, what happens?
BELLINI: Well, you know, the Journal reports today that people in the first-time buyer bracket are more likely to be unemployed, underemployed and have lingering student debt. But there's a larger issue to consider here, I think, and that's what some people are describing as a loss generation: young people who graduate from college during the financial crisis who were struggling to get their careers off the ground, even still. Many of them, you know, had to go back after college to living at home. And some economists say that this group is at a disadvantage in terms of their long-term wealth prospects, their 401(k)s, but also in terms of their prospects for buying homes and that's because they've had to start out at lower-paying jobs.
HOBSON: And it probably doesn't bode well for the housing market 10, 20, 30 years from now.
BELLINI: Well, exactly. And one of the things that people are saying is that they want to get in quickly before mortgage interest rates start to rise again. Some people were spooked by the increase in June by, you know, about a percentage point or so. And even though the Fed chairman recently said they'll keep interest rates low until unemployment is reduced, there's really sense out there that it's a window, an historic opportunity right now to lock in at a low fixed rate, but that window is going to close quickly and so many people are frustrated that they just can't get in because they don't have cash to do it.
Jason Bellini, senior producer and host of "The Short Answer" videos at The Wall Street Journal. Jason, thanks as always.
Thanks so much.
HOBSON: And more on the cash crunch for families coming up. HERE AND NOW. Transcript provided by NPR, Copyright NPR.