Bridging the Gap
for
Today’s Homebuyer
Stacey M. Walker
Director, Strategic Markets
October 27, 2011
It’s A Great Time To Buy
 Inventories are at all-time highs at lower prices, increasing
affordability
 Mortgage interest rates at historical low
 Opportunity based on the type of supply
© Freddie Mac 2011
Market Drivers Influence
Purchase Patterns
Market Drivers Influence Purchase Patterns
Past Few Years (2005 – 2007)
Today (2011)
Summary
 Consumers anxious to become
homeowners to catch the
appreciation wave
 Consumers waiting on the
sidelines for prices to bottom
out or the market to stabilize
 The demographic profile
of homebuyers has not
changed.
 Minimal savings required for
down payment
 Consumers unsure whom to trust
 The value proposition of
becoming a homebuyer
has changed for most
consumers, resulting in
a change in their
behavior and approach
toward homeownership.
 Homeownership viewed as a
short-term investment
(Market Created Equity)
 Equity used as ATM for other
purposes beyond
homeownership
 Consumers took advantage
of exotic low initial payment
mortgages
 Savings now required for down
payment and closing costs
(5%-20%)
 Homeownership a longer term
investment (Homebuyer Creates
the Equity)
 Consumers feel unprepared
for mortgage obligation
 Consumers seeking simple
mortgage products with no
surprises
 New value proposition
is long-term investment
versus short-term
reward/ATM.
Given these changes, how do we attract, prepare, and serve
well-qualified homebuyers going forward?
Source -- Freddie Mac
© Freddie Mac 2011
4
Borrower Segments Face Challenges
and Heightened Anxiety
Borrower Segments
Challenges
 Lack of down payment
 Anxiety over housing prices
 Inability to find financing
 Lack of information
 Lower equity in existing home
 Challenges of selling home
 Fear of declining house values
Universal
 Fear of making wrong
choices
 Fear of foreclosure
 Fear of unemployment
 Fear of continuing
decline in home prices
(investment loss)
 Not the right time to buy
 Monthly payment and
cash upfront issues
 Repairing credit
 Fear of unemployment/
foreclosure
 Lack of down payment
 Down payment struggles
 Costs are higher for
credit scores from 620 –
640
Source -- Freddie Mac
© Freddie Mac 2011
5
Who Are Today’s
Homebuyers?
Homebuyers Today
2010 Homebuyer Profile
First-time Homebuyer – Demographic
Characteristics
 Share increased from 47% in 2009 to 50% in 2010
 Married couples represent 48% of FTHBs
 Single female buyers represent 23% of FTHBs
Repeat Buyer
50%
First-time
Homebuyer
50%
 Single male buyers represent 15% of FTHBs
First-time Homebuyer Demographics
Other 1%
Unmarried
couple
12%
Single
male buyers
15%
Married couple
48%
Single female
buyers
23%
Source -- NATIONAL ASSOCIATION of REALTORS Profile of Home Buyers and Sellers 2010
© Freddie Mac 2011
7
Age of First-time Homebuyers
Age of Homebuyer
Homebuyer Age
2009
2010
 First-time homebuyers are typically
younger than repeat buyers.
18-24
6%
11%
25-34
34%
56%
 More than half of first-time homebuyers
were between 25-34 years old.
35-44
22%
19%
45-54
18%
10%
55-64
13%
4%
65-74
6%
1%
75+
2%
2%
Source -- NATIONAL ASSOCIATION of REALTORS Profile of Home Buyers and Sellers 2010
© Freddie Mac 2011
8
Projected Population Increase
2010–2025
Projected Population
Increase – 2010-2025
30%
25%
(16.06%)
(33.46%)
(52.38%)
5%
0%
White
5.58%
Black
14.65%
16.75%
10%
11.23%
15%
7.97%
49,726
57,711
66,365
75,772
52.38%
2010
2015
2020
2025
20%
12.02%
(14.65%)
(30.11%)
(46.44%)
3.92%
14,415
16,527
18,756
21,109
33.46%
35%
30.11%
(5.58%)
(11.23%)
(16.75%)
Hispanic
2010
2015
2020
2025
45%
40%
39,909
42,137
44,389
46,594
Asian
2010
2015
2020
2025
50%
Asian
16.06%
(3.92%)
(7.97%)
(12.02%)
46.44%
246,630
256,306
266,275
276,281
Black
2010
2015
2020
2025
Percentage
Change
55%
White
2010
2015
2020
2025
Population Growth 2010–2025
Hispanic
Source -- U.S. Census Data 2000
© Freddie Mac 2011
9
The Echo Boomers
 Echo Boomers are the largest generation in U.S. History since the Baby
Boomers
 There are approximately 80 million Echo Boomers between the birth
dates 1982 to1995
 Echo Boomers are also called Millennials and are part of Generation Y
 Post housing collapse, Echo Boomers hold the highest unemployment
rate of any U.S. demographic
Source: http://echoboombomb.blogspot.com
© Freddie Mac 2011
10
Echo Boomers & Housing
Do Echo Boomers want homes?
"Why would I ever buy a home? You can say that renting is 'throwing money away,' but you'll never get all
the money you paid in maintenance back, so ..." ~ One of the many skeptical Echo Boomers about
homeownership
A real estate agent's worst nightmare: someone who thinks homeownership is "throwing money away."
© Freddie Mac 2011
11
You Are the Critical Link
 You are the critical link to helping well-qualified homebuyers achieve
their homeownership objectives:
» Utilize your mortgage finance expertise.
» Identify and match available financial resources (government,
nonprofit, private sources) with a sustainable mortgage solution.
 First-time homebuyer dream realized – and more business for you –
if you know where to find those affordability gap solutions.
 Freddie Mac Strategic Markets is here to help.
© Freddie Mac 2011
12
Building Business Opportunities
Sustaining Homeownership
© Freddie Mac 2011
CreditSmart®
Teaches Consumers About Credit, Money, and Homeownership
Tools:

Comprehensive Instructor Guide includes
speaker notes, worksheets, glossary, and more.

User-friendly workshop presentation on CD
helps instructors emphasize key points.

Information-packed Consumer Workbook
includes worksheets, case studies, and
glossary.

Abridged curriculum provides review of all
topics. Great resource for housing fairs,
festivals, counseling, etc.

The Online Implementation and Promotion
Guide gives instructors around-the-clock access
to workshop tools, activities, games, etc.

Participants access easily customizable flyers,
ads, brochures, and more.
© Freddie Mac 2011
FreddieMac.com/creditsmart
14
Consumer Education Series Helps You Reach and Teach
Tools:
 Free set of consumer education
brochures.
 Nine-part series spans a range of topics
from “Dispelling the Myths of
Homebuying” to “Getting Back on Track
After Foreclosure.”
 Brochures can be used individually or as
a set; they can be used independently or
as part of an initiative.
 Brochures are easily downloadable and
customizable with logo and your contact
information.
© Freddie Mac 2011
15
Outreach Tools:
Consumer Fact Sheets and Postcard Mailers
 Consumer Fact Sheets in English
and Spanish – Add your logo and contact
information to these pre-designed, consumerfriendly flyers and distribute them to your area
Realtors so they can inform their first-time
homebuyer clients.
 Postcard mailers – Add your logo and contact
information to these customizable postcards to
advertise your down payment assistance
workshops.
FreddieMac.com/purchasemarket/downpayment.
html?tab=2
© Freddie Mac 2011
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Community Stabilization
 We bring together municipalities, nonprofits, lenders, and other
stakeholders in local communities.
 Through these coalitions, we support comprehensive initiatives that
address each area’s housing challenges and promote stable
neighborhoods.
 “Take Root” campaigns for use by local coalitions support new
homeownership opportunities and reduce the number of vacant
properties.
 Solutions promote foreclosure avoidance and encourage homeowners
to seek assistance so they can stay in their homes and in their
neighborhoods, whenever possible.
 Options to generate workforce-housing initiatives that bring together
employers, lenders, and others, and encourage employees to live
where they work.
© Freddie Mac 2011
17
© Freddie Mac 2011
18
What Does This All Mean for You
and Your Borrower?
 The lending paradigm has shifted.
 There are opportunities out there to attract and build business
from first-time homebuyers.
 Many well-qualified first-time homebuyers need your assistance
to overcome fears.
 Many first-time homebuyers will need to seek ways to bridge
small gaps in down payment and closing costs.
© Freddie Mac 2011
19
Resources
 Housing Industry Professionals :
» www.freddiemac.com/purchasemarket
» www.echoboombomb.blogspot.com
 Local Market Reports:
» www.realtor.org
» www.city-data.com
» www.mybestsegments.com
 Eye on the Economy:
» www.nahb.org
 Other:
»www.takerootdenver.org
»www.takerootmilwaukee.org
© Freddie Mac 2011
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