Ok, so buyers are more scarce than they were before. Credit availability, rising unemployment and compensation are the primary concerns.
But those who will lead us out of this market are likely going to be the ones who were never in it – first time buyers because they have little baggage to carry with them.
- First time buyers don’t have to sell a property to afford to purchase
- First time buyers will likely use conventional financing (sub-$729k mortgages in Manhattan) and jumbo (non-conventional/non-jumbo conventional) was not addressed in the stimulus plans)
- First time buyers have no preconceived expectations about previous high water marks – see the current market as a deal.
- Sellers have been softened up since last summer suggesting more negotiability.
The New York Times has run two fairly strong pieces on this topic in recent weeks:
A Windfall for (Some) Buyers [NYT 1-16-09]
Door Opens for First-Time Buyers [NYT 3-13-09]
First time buyers are starting to be a factor in the current market, which is something we saw in the mid-90’s after a down market.
A First-Time Buyer’s Primer and Road Map [NYT 3-3-96]
About Real Estate; First-Time Buyers Lift Sagging Market [NYT 8-11-95]
And of course, at the tail end of the 1990-91 recession…
First-Time Home Buyers Now Leading The Market [NYT 6-23-91]
So now mortgage shoppers will either be a first time buyer or will be assigned to the list of last time buyers? Baloney. The engine won’t run very long on that much gas. Refis and move arounds will be back right along with the newbies. Who thought up this exclusive first time buyer club?
Let’s also keep in a mind that a first time buyer is anyone who has not been an owner for 3 years. I sold my home in July 2007 at the peak in my metro. I will be a first time buyer next summer. And I am VERY clear about what the high water mark was.
Is it me, or is anyone else incredulous at the shear volume of stories about how uninformed/gullible consumers are needed to jump start the next up cycle?
“Is it me, or is anyone else incredulous at the shear volume of stories about how uninformed/gullible consumers are needed to jump start the next up cycle?”
I am now. But that begs the question why? It can’t have much of the needed economic impact. Do you suppose there is too big an inventory of starter homes or it sounds politically benevolent?
Seems like this is incrementally turning into the truth although as someone else said, refinances will probably linger for a long time as well.
This month In my monthly report I noted that the lower priced home were moving along quite nicely in the Birmingham, Alabama area. Absolute inventory is down quite a bit, and months of inventory is slowly coming down as well. In our market this is pretty much limited to homes under $200,000,. In this market that is over 40% of the market however!!
I agree, refinancing will help drive the market. Just a general observation but I think that people who have already been burned by their mortgage loans will want to take advantage of all the programs that are currently coming out to help them and utilize the lower interest rates to lessen the pain of their payments. Newbies would probably be more hesitant to enter the market until it has stabilized.
Thanks for the info. Looking forward to hearing more from you.