It has been reported that in January of 2011 first-time home buyers made up less than 30 per cent of the market. This is the lowest it has been since the National Association of Realtors began tracking first-time home-buyer activity on a monthly basis.
In a healthy real estate market first-time buyers can be responsible for as much at 45% of all home purchases. Where are all the first-time buyers now when interest rates are so low and home prices have fallen to such affordable levels?
Back in March a USA Today article considered some of the reasons first-time home buyers are hesitant in the current market:
Lending standards have gotten tougher: It is now more difficult for many first-time home buyers to meet credit or employment history requirements. Plus, lenders are requiring higher credit scores and some want higher down payments.
Expired tax credits: Federal tax incentives lured first-time home buyers in 2009 and 2010 and gave home sales a big boost. Now that those tax credits have expired, first-time home buyers are not as eager to get into the housing market.
Competition from cash buyers: NAR reported recently that cash buyers are accounting for a record-reaching 33% of existing home sales. Obviously sellers prefer cash transactions because there is lower risk and greater likelihood that they will close. Competing against these cash buyers has also left some first-time buyers out.
When you are ready to buy or sell...call me. I can help.
Over 30 years of experience.
Tony Morganti, CRS, ABR