Good Time For First Time Home Buyers

This was published by Nar. I thought it was good information to pass on.

Historically low interest rates. Attractive home prices. Impressive inventory.

And now an $8,000 tax credit for first-time buyers that can be used as a down payment on a home.

What’s not to love about this unique scenario for first-time homebuyers in Florida? It’s no wonder this demographic is growing monthly.

Let’s look closer at why the first-time buyer market is so strong:

1. $8,000 tax credit. It’s hard to say “No” to free money, and that’s basically what the federal government is offering with very few strings attached.  Better yet, the money can be used as a down payment, thanks to FAR’s efforts to pass legislation in Tallahassee in April. 

2. Other government incentives. The 2009 American Recovery and Reinvestment Act opens doors to affordable homeownership to people who had not been able to qualify for loans or hand over large downpayments.

3. Interest rates. Hovering around 5 percent, this means monthly payments are less than even last year for the same home.

4. A buyer’s market inventory. Nothing needs to be explained here. Everyone wants options and choices when making the most expensive purchase of a lifetime.

5. Price. Florida’s median sales price for existing homes in March 2009 was $141,300; a year ago, it was $201,700. Do the math.

6. Look who’s buying. In March 2009, first-time buyers accounted for more than half of all home sales nationally, with activity concentrated in lower price ranges, according to NAR.

7. Spending power. Many younger buyers have high starting salaries out of college. Talk about Bright Scholars!

8. Lifestyles. Many adults in their 20s are marrying, starting families and ready to purchase a home.

9. No contingent sales. First-time buyers don’t have to sell a current residence in order to complete the transaction.

“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,” says Lawrence Yun, chief economist for the National Association of Realtors® (NAR).

An NAR practitioner survey in March showed first-time buyers accounted for 53 percent of transactions, based largely on contracts offered before the $8,000 first-time homebuyer tax credit became available.

NAR President Charles McMillan says first-time buyers are crucial at this stage of a housing recovery. “The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down, according to their needs,” he says.

Another recent study, the CENTURY 21 Homebuyer Survey, shows that Generation Y buyers (born between 1979-1994) are purchasing first homes at a younger age than their Generation X (born between 1965-1978) and baby boomer (born between 1946-1964), counterparts.

Research also indicates that Generation Y consumers want to live close to where they work and socialize but also be near friends and family. Most prefer living in the city or at least in close proximity.

If potential homebuyers have never owned property, they typically welcome professional assistance during the purchase process. “When working with younger buyers, the most important thing is to educate them,” says Lynn Savits, a 25-year sales associate with Coldwell Banker’s Aventura office. “They need to understand the housing market, the process of getting a mortgage and all the steps in the transaction – and they want you to be there the whole way.”