Jonathan J Miller, Columnist

Do First-Time Homebuyers Need Help?

Don't count on new rules allowing 3 percent down payments to boost the housing market.

December 31, 2014 at 2:00 PM UTC

Jonathan Miller writes about the housing economy and other aspects of real estate. He began a real estate blog, the Matrix, in 2005, and has written a column for Curbed.com. He is co-founder of Miller Samuel, a residential real estate appraisal company, and the commercial valuation firm Miller Cicero.

Means to an end.
Photographer: Justin Sullivan/Getty Images

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

To bring more first-time buyers into the housing market, Fannie Mae and Freddie Mac recently said they would offer certain mortgage programs that require down payments of as little as 3 percent, down from 5 percent. Because first-time buyers already make up a large share of the housing market, the wisdom of this policy change should be open to question.

As the chart below shows, the average market share of first-time buyers has slipped from the 2009 high of 60 percent to 54 percent in 2013, the last year with data available. The surge was partly a result of a vast expansion of federal programs to attract first-time buyers in a bid to prop up the collapsing housing market. The combination of record-low mortgage rates and plunging prices also led many first-time buyers to come out of the woodwork. Note that during the mid-2000 boom years, first-time buyers often made up less than 40 percent of the market.