According to reports in the Wall Street Journal and the Miami Herald first time home buyers are accounting for a large portion of the recent boost in existing home sales. The reports cite lower home prices and the provision in the Obama stimulus plan that gives first time home buyers an $8,000 credit.
Indeed, on a conference call following HomeGain’s release of its survey of Realtors on Home Values, HomeGain member Jeffrey Bastress of Starpoint Realty in Massachusettes cited that he had recently received numerous offers from first time home buyers citing the $8,000 credit as a reason for their interest in purchasing a home.
Andrew Duncan of Keller Williams of Tampa also cited the new tax incentives, lower home prices and great interest rates as driving new home buyers to make their first purchases.
Could it be however, the reason that first time home buyers are making up a good portion of existing home sales is that they haven’t been burned yet?
First time home buyers have never lost a home, conducted a short sale, gone into foreclosure or suffered the associated and debilitating loss of credit. It’s encouraging to see first time home buyers enter the market. In order for the housing recovery to take hold, it will take more than just first time home buyers snapping up bargains on lower priced homes.
Could it be that an entire generation of home buyers that purchased homes from 2001-2006 have turned off homeownership?
A good portion of these folks have gone through the painful process of foreclosure or short sale and perhaps are saying never again. These people need to regain their financial footing and their confidence that purchasing a home is still a good investment. That may be a slow process.