Salient to Investors:

Home prices are rising faster than incomes in much of the US.

Thomas Lawler at Lawler Economic & Housing Consulting said the decline of first-time homebuyers, hurt by rising prices and tougher credit standards threatens to widen the wealth gap between owners and renters. Lawler said potential first-time buyers were not able to take advantage of the high point in affordability and the low point in prices.

NAR said first timer buyers accounted for 26 percent of purchases in January versus 30 percent a year earlier and the lowest since monthly measurements began in October 2008. NAR said purchases rose 8.2 percent for residences costing more than $250,000, but fell 10.7 percent for homes worth less.

Leslie Appleton-Young at the California Association of Realtors said it is a huge problem as only 32 percent of households there could afford the median-priced home at $438,040, down from 48 percent in 2012.

Black Knight Financial Services said 47 percent of US purchases in December were paid for with cash, versus 27 percent a year earlier and the highest level going back to at least 2005.

Glenn Kelman at Redfin said 39% of owners looking for better homes plan to keep their current house as a rental, and being a landlord is much more of a norm.

William Emmons and Bryan Noeth at FRB of St. Louis said Americans under age 40 have recovered only a third of the wealth they lost after 2007, while older households are back to pre-crisis levels.

30-year fixed loan rates were 4.37 percent last week versus 3.35 percent in early May 2013 and a 2-yr peak of 4.58 percent in August.

The number of FHA borrowers purchasing their first homes declined by 38 percent to 550,000 last year from the 2010 peak.

Hui Shan and Eli Hackel at Goldman Sachs said credit tight relative to most of recent US housing history with more than 40 percent of borrowers in 2013 having FICO scores above 760 versus 25 percent in 2001.

Roberto Quercia at the University of North Carolina said equity in a group of 46,000 homes purchased with median 3 percent down payments between 1999 and 2003 appreciated at a median annualized rate of 25 percent by Q2 2013, while the equity on initial down payments of $1,950 increased a median $18,429. The S&P 500 had an annualized rate of return of 3 percent between July 1999 and June 2013.

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