Through the end of 2014, the housing market recovery/expansion this cycle had been led by the top two price quartiles, or in other words by higher income buyers who were more likely to meet down payment and lending requirements.
Starting in 2015, absorptions, our primary unit demand indicator, have noticeably strengthened within the third quartile, implying average income buyers are starting to contribute more meaningfully to the single family housing recovery/expansion.
Over the past three months, we have observed an accelerating trend in year-over-year growth in absorptions within the bottom quartile, outpacing the top three price quartiles. Historically, the bottom quartile has largely represented first-time home buyers as well as lower-income buyers.
While three months doesn’t necessarily make a trend, it's worth noting that year-over-year absorption growth within the bottom quartile sharply accelerated in the first week of September (+20%). Implications that the bottom quartile participated more fully in the housing market recovery/expansion are manifold, including the impact on the broader economy, certain homebuilders and potentially Apartment REITs.
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