Though the housing market is recovering, first-time homebuyers have thus far been an absent component of that recovery; when will they return?
The housing market may be showing its best signs of life in years, but one essential component to a healthy, fully functioning housing market has, thus far, been conspicuously absent – the first-time homebuyer.
Normally comprising 40 percent or more of home sales, first-time homebuyers in the past year have made up a much smaller percentage of home purchases, though the latest findings from an industry-leading survey suggests there may be changes coming from around the corner.
HousingPulse Tracking Survey – Return of the First-Time Homebuyer?
According to the most recent Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, an influential study of the housing market that surveys roughly 2,000 real estate agents each month, first-time homebuyers are not only coming back to the housing scene – they represent the fastest growing category of home purchasers:
- First-time homebuyers accounted for 34.5 percent of transactions in February, based on a three-month moving average.
- That’s the second monthly increase in a row for first-time homebuyers, after hitting a four-year survey low of 32.9 percent of transactions in December.
- First-time homebuyer traffic, though, was even more encouraging, hitting a four-year survey high of 66.4 percent in February (any score above 50 percent indicates an increase in home shopping traffic).
Will They Buy?
Thomas Popik, a research director for Campbell Surveys, said it remains to be seen whether or not the homebuyer traffic measured by the HousingPulse translates to more first-time homebuyer purchases.
“We see strong first-time homebuyer traffic, but it’s still not clear that the traffic will translate into increased purchases,” Popik said. “First-time homebuyers are dependent on low-downpayment financing, such as FHA mortgages, and announced FHA program changes will take effect this spring.”
Here in the Chicagoland area, Steve Lawrence, the managing broker of Baird & Warner Lake County, said that though he’s seeing plenty of activity from first-time homebuyers, they are facing their share of adversities to buying their first residence.
“We are seeing a lot of first time buyers. Currently there are over 250 homes available in Lake County between $100-$150,000, and many of those homes were REOs that have been bought, fixed up, and flipped,” Lawrence said. “First-time buyers are competing with investors who are buying them to rent out. Multiple offers is the norm, [and] cash usually wins. First-time buyers face appraisal issues and tight scrutiny of lenders through the closing date.”