RealEstateEconomyWatch.com

With virtually all mortgages today requiring a down payment, how is it that single men and women continue to account for nearly one-third of all home sales?

Singles first topped 30 percent of the market in 2003 when no-down loans were common.  However, the demise of no-down payment ARMs in 2006 and 2007 and the subsequent tightening of lending standards that today made 20 percent the typical down payment for a fixed-rate conventional loan, hasn’t dropped singles’ market share by even one point.   

Last year single women accounted for 21 percent of all sales and single men, 10 percent; in 2003 singles reached 30 percent for the first time.  Singles made up 37 percent of first-time buyers last year, and first-time buyers bought 47 percent of all the homes in 2009.

As no-down loans and schemes such as down payment charities went away, first-time buyers turned to FHA financing because of its low 3.5 percent down payment.  However, FHA has recently taken steps to reduce its exposure to risk and will become increasingly expensive.  One of its first steps was to increase by 50 percent the cost of its mortgage insurance premium, effective last week.

A new survey of single homeowners by Coldwell Banker reveals what many suspect: parents make it possible.  Faced with the problem of coming up with as much as 20 percent of the cost of a starter home as well as closing costs, many first-time single buyers are turning to mom and dad, who in turn are getting some equity out of the deal.  The survey found that of the single homeowners who own their home jointly with another party, almost half (49 percent) made the purchase with their parents.

Parents are not the predominant source of help for most singles, however, Among all buyers last year, only 18 percent of single women 12 percent of single men relied on a gift from a relative or friend.  Fifty-four percent of single women and 63 percent of single men relied upon savings, according to the National Association of Realtors.

The CB study also found that two thirds of singles are buying below their borrowing limits.  Sixty-eight percent of single homeowners purchased a home priced below what they could afford.