Profile of a First Time Home Buyer

Data Analysis Finance

Disclaimer: this post does not intend to explain trends observed in the graphs below. It simply aims at defining the profile of a first time home buyer in 2017. Trend analysis will be the subject of a different post.

The below analysis has been realized using FHL Banks data from FHL Banks (Federal Home Loan Banks) are 11 government-sponsored banks providing liquidities to commercial banks to support home buying in their communities. Each bank is responsible for a specific region — see figure 1.

Figure 1 — FHL Banks Region Division

This analysis attempts to define who a typical first time home buyer in the US is. To realize this analysis, the data have been analyzed using python (GitHub Repo) and cross-referenced with US Census data. To establish a “typical” profile, we analyzed first time home buyers across 4 attributes:

  • Average age
  • Gender
  • Ethnicity
  • Income

Note: the income analysis includes the total income of borrower(s) (which includes co-borrowers income if one was present). Age, ethnicity, and gender only look at the principal borrower information.

Average Age

In 2017, the average age of a first time home buyer was 36.7 years old, which represents a significant decrease since its pick in 2011 (43.4 years old) — see figure 2. Since 2011, the average age of a first time home buyer has decreased by 15%.

Figure 2 — Average Age of a First Time Home Buyer

Gender Distribution

Most of the principal borrowers in 2017 were males (~64% males vs ~31% females). The percentage of first-time male borrowers has been slightly decreasing for the past 8 years (~ -3%) — see figure 3.

Figure 3 — Distribution of Gender for First Time Home Buyer

Profile of a First Time Home Buyer

With ~80%, Caucasian/white represent most of the borrowers. They are followed by Asian (~7%), African American (~3.5%), American Indian (~2%), and Pacific Islanders (~0.5%). It is important to note the over-representation of the Caucasian ethnicity amongst borrowers in comparison to the census data. The African American ethnic group is under-represented amongst borrowers in comparison to the Census data.

Average Income

In 2017 the average income of a first-time borrower was ~$85,000, which represents a ~39% increase since 2009. Comparing the 2017 average income of borrower(s) with the US Census, we can see that it is ~$24,000 greater. Comparing the US Census Median income for the period 2013–2017 with the average borrower(s) income for the same period, the former increased by ~13%, while the later increased by ~40%.

Wrapping Up

Base on our analysis, we can define a “typical” first time home buyer in the US as: “an individual/household with a 36/37 years old caucasian male as the principal borrower, and an average income of about $85,000 per year”.