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SOURCE Genworth Mortgage Insurance
However, supply constraints continue to hinder growth and drive up home prices; impact of tax reform expected to be a net positive
RICHMOND, Va., Feb. 22, 2018 /PRNewswire/ -- Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc. (NYSE: GNW), today released its First-Time Homebuyer Market Report for the fourth quarter and full year 2017. The report aggregates all publicly-available government data into one dataset. The below highlights are followed by analysis from Chief Economist, Tian Liu.
2018 Macro-Economic Predictions
Comments from Tian Liu, Chief Economist, Genworth Mortgage Insurance:
"The first-time homebuyer segment had one of its strongest years on record, and we expect it to continue growing in market share and driving the purchase market in 2018. Since 2014, the segment has accounted for 82 percent of home purchases, but is still facing many headwinds. Most homes built today are significantly outside of the typical first-time homebuyer's price range ($250,000 and below). This supply shortage at the lower end of the price curve is driving home prices higher, which is sidelining many first-time homebuyers. We expect the growth of new single-family homes to continue lagging demand.
Additionally, first-time homebuyers continued driving the growing trend towards using lower down payment mortgages, recording the most quarterly loans of this type in 18 years. This coincided with loans backed by private mortgage insurance having one of their best quarters on record, at 157,000 loans insured. When considering that there are still 2,700,000 first-time homebuyers sitting on the sidelines, we believe volume for low down payment mortgages and privately insured loans will remain on its upward trajectory.
Declining repeat homebuyer volume continued to hinder overall growth numbers and, for the first time since 2011, we saw a quarter in which year-over-year demand declined. This is partially due to the inflationary pressure on home prices, which is causing repeat buyers to consider re-investing in their own homes rather than paying a premium to buy. This, in turn, is delaying entry into the market for many first-time homebuyers.
Regarding tax reform, we view the new laws as a net-positive for first-time homebuyers, but caution that this also varies by region. States with higher taxes will likely feel a lesser benefit than states where the cost of living is lower. Notably, this reform also comes at a time when the economy is already at full employment, which could add to inflationary pressure and drive up long-term interest rates. During the last major uptick in interest rates between April and September 2013 (with about twice the increase), the growth of the first-time homebuyer market slowed from 12 percent to 2 percent."
About Genworth's First-Time Homebuyer Market Report
The First-Time Homebuyer Market Report is the only economic series measuring the number of home sales and mortgages to first-time homebuyers covering the entire housing market. This report provides quarterly estimates of the first-time homebuyer market since the first quarter of 1994-spanning two housing cycles and 24 years. It provides a historical perspective necessary to understand today's first-time homebuyer market. It is based on a sample size of 21 million first-time homebuyers from government reports and industry data. By capturing the entire market over a long period, and providing the latest market snapshot, this report makes the first-time homebuyer market more visible to housing industry participants and policymakers.
For access to the full report, visit: https://miblog.genworth.com/first-time-homebuyer-market-report-02-18/.
About Genworth Financial
Genworth Financial, Inc. (NYSE: GNW) is a Fortune 500 insurance holding company committed to helping families achieve the dream of homeownership and address the financial challenges of aging through its leadership positions in mortgage insurance and long term care insurance. Headquartered in Richmond, Virginia, Genworth traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.
From time to time, Genworth releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts and Really Simple Syndication (RSS) feeds regarding new postings. Enrollment information is found under the "Investors" section of genworth.com. From time to time, Genworth's publicly traded subsidiaries, Genworth MI Canada Inc. and Genworth Mortgage Insurance Australia Limited, separately release financial and other information about their operations. This information can be found at http://genworth.ca and http://www.genworth.com.au.
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