FOR MANY YOUNG PEOPLE, the dream of homeownership seems to be elusive if not impossible. Numerous studies and surveys indicate that increasing numbers of young families are putting off the idea of buying a home. The median age of home buyers is on the rise and the percentage of younger families buying their first homes is declining — a trend blamed on many factors, from the burden of student loan debt to the perception of onerous loan qualification standards.

The National Association of Realtors (NAR) recently released the results of a home buyer and seller survey completed in June. The survey consisted of 127 questions and was mailed to 72,206 home buyers and sellers between July 2013 and June 2014, with a response rate of 9.4 percent. The results are interesting, and changes in the demographics and habits of buyers and sellers are clear.

The survey results indicate that the percentage of first-time homeowners continues to decline below historical norms; they presently account for just 33 percent of the market. Historically, first-timers have made up about 40 percent of the market, but their numbers have been declining since 2010, when they peaked at 50 percent.

According to NAR, 59 percent of young renters (ages 18-39) believe that owning a home makes more sense than renting, but 73 percent believe that obtaining a mortgage would be difficult today. Fully 75 percent of renters believed that homeownership is an important long-term goal.

As other studies have indicated, a primary obstacle to homeownership remains the ability to save for a down payment, coupled with an increase in the minimum down payment for this generation of home buyers versus previous generations. Twenty-three percent of first-time buyers in the NAR survey indicated that saving for a down payment was the most difficult task in the home buying process; 57 percent of respondents indicated that student loan debt was the biggest obstacle preventing them from saving for their first home; another 45 percent said the problem was credit card debt.

Take note of that last figure, parents, as you prepare your students for college next year. Credit card companies are more than happy to bury young college students in debt even before they graduate and get their first real job. There seems to be no shortage of folks blaming student loan debt as the big issue, and no shortage of calls for government reforms or legislation, either — but meanwhile the credit card companies are happily extending credit to starving students.

Some theorize that bigger down payments are a good thing for the overall health of the housing market, as more people will be protected from the potential of owing more than their home is worth in the event of a downturn in values, as we experienced in the last recession. I tend to think that there is a negligible difference between a down payment of 3 percent and 9 percent if the economy tanks and values plummet 50 percent, as they did in some areas during the Great Recession.

In another interesting result from the NAR survey, 25 percent of respondents reported difficulty in obtaining mortgage financing as a limiting factor or causing them to delay their home purchase. But the reality is that for most people, qualifying for a regular prime-grade mortgage today is no more difficult than in the past. Typically the underwriting requirements for a plain-vanilla, fixed-rate loan are largely the same today as they were 27 years ago when I was a rookie loan officer. However, the documentation requirements have increased immensely, which creates a perception of difficulty.

As an industry participant, I am somewhat concerned by the drop in first-time home buyers to just 33 percent of the market. A 7-percent decline off statistical norms is pretty significant and could have longer-term consequences for the housing market and the economy in general. The housing industry, with assistance from our government, needs to do more to assist younger families.

Guy Benjamin (CAL BRE License #01014834, NMLS 887909) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or guyb@fairwaymc.com.

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