First-Time Buyer Clout Expected to Grow in 2009
RISMEDIA, January 9, 2009-Already the dominate force in U.S. housing activity, the first-time buyer is expected to play an even bigger role in 2009 and possibly beyond.
“Our fourth quarter random survey of HouseHunt member-agents showed that first-time buyers accounted for 65% of existing home sales - up from 46% in the first quarter of 2008 - and nearly double the normal ratio between repeat and move-up buyers,” said Michael Bearden, president and CEO of HouseHunt, Inc. “Our latest national survey tells us that qualified first-time buyers are taking advantage of home prices not seen in five to seven years in many areas. Affordability is no longer a major issue in many areas across the country–especially in those metro areas where prices spiked dramatically between 2003 and 2006. Sales activity today is based on the willingness of lenders to lend. Our member agents report that most buyers with good credit histories are able to qualify for mortgage loans.”
Lawrence Yun, chief economist for the National Association of Realtors (NAR), said a higher market share of first-time buyers makes perfect sense, and it’s a trend he expects to grow: “First time buyers are much more flexible in entering the market because they aren’t concerned about selling an existing home. Given low home prices, plentiful supply and affordable interest rates, it’s been an optimal time for entry-level buyers with a long-term view.” Yun also called for Congress to extend incentives like the first-time buyer tax credit to all home buyers.
HouseHunt’s survey of nearly 2,000 member-agents in 47 states in the fourth quarter of 2008 also found:
Market activity involving both first-time and repeat buyers has picked up dramatically in many areas. One example is Marie Gregor of Plaza Real Estate, exclusive HouseHunt member-agent in East Wichita, KS. She said: “My phone started ringing again right after the Christmas and New Years holidays. My e-mail responses also picked up. With three universities, Kansas State University medical school, three community colleges and McConnell Air ForceBase attracting a steady stream of potential home buyers and sellers, you can see why I’m optimistic that our market will continue to be strong for a long time.”
Home buyers are beginning to close the important buyer-seller ratio. Thirty-four percent of respondents reported more buyers than sellers, compared to 27% in the third quarter. Seventeen percent said the ratio is about even, up from 11%. This is the first time the buyer-seller trend lines have reversed since 2004.
Forty-six percent of home sellers report they are getting 95% or more of their asking prices. This is down from 61% who said they received 95% of their asking prices in the previous quarter.
Positive price appreciation was reported by one of four sellers in the past year. This ratio is virtually unchanged from the third quarter, indicating that home prices could be at or near a market bottom in many areas
Average time on the market — the time required between listing and sale - is also unchanged from the third quarter. Ninety-four percent said it is currently taking more than 60 days. Of that figure, 31% said 60 to 90 days; 40% said 90 to 120 days; and 23% said more than 120 days. Eight percent reported no change in the time required, compared with the third quarter.
The inventory of unsold homes is still trending upward. Forty-three percent of respondents reported decreases or no change. Total housing inventory of unsold homes on the market at the end of November was estimated at 4.20 million by NAR, representing an 11.2 month supply. A six-month supply is regarded as a more normal market.
Here’s a sampling of comments from additional member-agents participating in HouseHunt’s survey:
Scott Carrier of Keller Williams Realty, exclusive HouseHunt member-agent with his wife, Dana, for Germantown and Collierville, TN, reported increases in activity since the holidays from both first-time buyers and repeat buyers. “Financing is usually available to buyers with high credit scores and those using FHA. Most sellers are getting 94 to 98% of their asking prices,” Carrier said. “Average time on the market for a listing to sell is 90 to 120 days. Our average home price is $375,000. We have a lot of people upsizing to take advantage of lower prices.”
Greg Olson of RE/MAX Suburban Realty, exclusive HouseHunt member-agent for Schaumburg and Palatine in the Chicago metro area, reported a very busy December and first couple of weeks of January after a very slow fall. “Our prices are down to 2004 levels,” Olson said. “Our first-time buyer ratio is 65% or even higher. Most are young singles and younger couples who have rented for a few years.” He estimated time on the market at 60 to 90 days, on average. Average home price is $325,000.
Maureen D’Aiutolo of Key Realty Group in Gaithersburg, MD, exclusive HouseHunt member-agent for North Bethesda, estimated that 70 to 75% of her business is from first-time buyers. “Typically, they are new to the area and have been renting or they are renters who have been on the sidelines waiting for prices to go even lower. Price-wise, we’re down about 50%. Also motivating buyers is the fact that rental rates have just skyrocketed and that there are so many incentives available to buyers from both the state and the city. Traditional financing is also available to buyers with good credit.”
Tim Rogers of Keller Williams Advantage Realty, exclusive HouseHunt member-agent in State College, PA, said a student and faculty enrollment of 48,000 at Penn State University provides a steady flow of potential first-time and repeat buyers. “The university drives our real estate market,” he said, “and is also a market stabilizer for our area. Our biggest demand is for homes in the $175,000 to $225,000 range for students and in the $300,000 to $350,000 range for faculty and young professionals. We have about a six-month supply of homes on hand and lots of good financing programs available.”