There are a lot of things wrong in housing hampering the entire industry, and Nomura’s U.S. analysts think they figured out at least one that few other have discovered.

The unimaginative financial pundits blame the weather for the housing industry’s weak tea in 2014.

The money take looks at how housing prices have artificially inflated thanks to nearly 40% investor and cash sales, even as owner occupant homebuying has been, shall we say, suboptimal?

A generational smart take looks at the various reasons that first-time homebuyers – mostly Millennials – aren’t buying and says student debt and meager income is a big factor.

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Nomura’s note to clients has a take few have offered: The first time homebuyers are holding out and it’s not student debt, a shift away from homeownership as a choice by Millenials, or any of that.

“One lingering concern is that many conventional home buyers that need mortgage financing for purchasing homes haven’t been entering the housing market as the share of first-time home buyers of existing home sales dropped 2pp to 27% in May and mortgage applications are still subdued,” Nomura says.

Analysts say it’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or that they don’t have a big enough down payment.

Applying for a mortgage is as uncomfortable and probing as a colonoscopy for some people. That’s even people who know they have great credit.

But with all the talk that makes its way out of the trade space and onto the street, the average buyer has heard vague talk about tightened credit boxes, QM rules, ATR rules, and so on – and what they think is that the colonoscopy scope just got bigger and now there’s an audience for the procedure.

That makes for, well...

There’s not as much talk making its way to buyers that the credit box has actually expanded.

Furthermore, barely a week ago, Freddie Mac put out an appeal to potential buyers to explain no, the down payment requirements aren’t as bad as most think. As HousingWire reported, potential homebuyers seem significantly unaware that more than one in five borrowers who took out conforming, conventional mortgages this year put down 10% or less. 

The problem is, these potential homebuyers are sidelining themselves. They don’t want the embarrassment or heartbreak of a refusal, so they either stick with their apartment for a while longer, or stay in the house they’ve outgrown.