Home Buying Gets Easier as Down Payments Dip
One hurdle to first-time homebuyers is starting to get a little lower: The average down payment for a home fell to less than 15 percent in the first quarter of 2015 to its lowest level since early 2012. The average down payment for the quarter was $57,710, according to RealtyTrac.
The lower down payments reflect new loan programs recently introduced by Fannie Mae and Freddie Mac, and lower insurance premiums for Federal Housing Authority Loans. The market is also adjusting as large, institutional investors who had been buying starter homes as rental investments dial back.
Related: U.S. Homeownership Dips, But Household Formation Rises
“Down payment trends in the first quarter indicate that first-time homebuyers are finally starting to come out of the woodwork, albeit gradually,” RealtyTrac vice president Daren Blomquist said in a statement.
Broken down by type of loan, the average down payment for conventional loans was 18.4 percent ($72,590), and the average down payment for FHA loans was just 2.9 percent ($7,609). FHA loans as a share of all mortgages increased from 21 percent in January to 25 percent in March.
Among the country’s largest counties, Wayne County in Detroit, Mich., had the lowest average down payment (12 percent), and New York had the highest (37 percent).
While lower down payments are good news for first-time homebuyers, they also are a reminder of practices that led to the housing bubble that began to burst in late 2006 and contributed to the financial crisis. During the height of the boom, buyers were able to purchase homes that they couldn’t really afford by putting little or no money down on the property.
Stat of the Day: 0.2%
The New York Times’ Jim Tankersley tweets: “In order to raise enough revenue to start paying down the debt, Trump would need tariffs to be ~4% of GDP. They're currently 0.2%.”
Read Tankersley’s full breakdown of why tariffs won’t come close to eliminating the deficit or paying down the national debt here.
Number of the Day: 44%
The “short-term” health plans the Trump administration is promoting as low-cost alternatives to Obamacare aren’t bound by the Affordable Care Act’s requirement to spend a substantial majority of their premium revenues on medical care. UnitedHealth is the largest seller of short-term plans, according to Axios, which provided this interesting detail on just how profitable this type of insurance can be: “United’s short-term plans paid out 44% of their premium revenues last year for medical care. ACA plans have to pay out at least 80%.”
Number of the Day: 4,229
The Washington Post’s Fact Checkers on Wednesday updated their database of false and misleading claims made by President Trump: “As of day 558, he’s made 4,229 Trumpian claims — an increase of 978 in just two months.”
The tally, which works out to an average of almost 7.6 false or misleading claims a day, includes 432 problematics statements on trade and 336 claims on taxes. “Eighty-eight times, he has made the false assertion that he passed the biggest tax cut in U.S. history,” the Post says.
Number of the Day: $3 Billion
A new analysis by the Department of Health and Human Services finds that Medicare’s prescription drug program could have saved almost $3 billion in 2016 if pharmacies dispensed generic drugs instead of their brand-name counterparts, Axios reports. “But the savings total is inflated a bit, which HHS admits, because it doesn’t include rebates that brand-name drug makers give to [pharmacy benefit managers] and health plans — and PBMs are known to play games with generic drugs to juice their profits.”
Chart of the Day: Public Spending on Job Programs
President Trump announced on Thursday the creation of a National Council for the American Worker, charged with developing “a national strategy for training and retraining workers for high-demand industries,” his daughter Ivanka wrote in The Wall Street Journal. A report from the president’s National Council on Economic Advisers earlier this week made it clear that the U.S. currently spends less public money on job programs than many other developed countries.
