First-time buyers are getting pushed out of the market, again. Investors looking to make more rental income are focusing on more affordable segments of the market, meaning they're snatching up homes from potential first-time buyers says the National Association of Realtors' Jonathan Smoke.

The National Association of Realtors' 2016 Investment and Vacation Home Buyers Report found that the typical buyer of an investment home in 2015 had a median household income of $95,800, so not surprisingly they have substantially more money than the average consumer. Investors also tend to put down higher down payments, making them more attractive to lenders, which can be tough for first-time buyers to compete with. Some investors don't even need to finance their home purchase.

In fact, the average investor mortgage had a down payment of 26% compared with an average of 11% for an owner-occupier, according to our analysis of 2015 purchase mortgage activity from Optimal Blue (an enterprise lending software company whose platform handles more than 25% of mortgages in the U.S.). Likewise, an investor has a qualification advantage of a lower debt-to-income ratio as well as much higher credit scores.

The primary motivation for these investors seems to be to get rental income from the property: Demand for rental properties is likely to remain strong for some time as the largest generation in history (millennials) slowly ages into prime home-buying years amid our tight supply and tight credit environment. Meanwhile, older households continue to recover from the foreclosure crisis, which explains why the homeownership rate today is near a 48-year low. Looking forward, this year is likely to see a similar pattern of buyers against the backdrop of growth in sales. The biggest challenges will remain the limited supply and tight credit conditions that tilt the balance toward households with higher income and exceptional credit—these households are the most likely to buy a vacation or investment home.

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