Great News: First Time Buyers Are Back!
I have read what I think must be the most welcome national real estate news item so far in 2016.
According to a recent Zillow survey, it would seem that, so far this year, 53% of all homes sales have been to first time buyers.
Given that there has been so much publicity about the reluctance of younger groups like millennials to get on the home ownership ladder, it would seem that such concerns might at last be diminishing, in light of these figures.
And another recent nationwide stat would seem to provide confirmation of this trend. New home starts reached a multi-year high in July and new homes tend to be a strong sector for the first time buyer.
This really is a fabulous development for everyone in the entire purchasing chain. A vibrant entry level is essential to improve fluency of sales right to the very top of the market. This is even more significant when one factors in that first time buyers have largely been absent for a number of years.
I would suggest that there are two key dynamics behind this trend. Firstly, the continuance of super-low mortgage rates is creating a sense of urgency among newcomers to home ownership, who are of course very aware that right now may prove to be their best ever shot at getting on the ladder and locking in a low rate for the life of the home loan.
In last week's blog, we talked about how it's now more expensive per month to rent in California than to buy, a statistic that currently holds true in no less than 41 other states. There's simply no question that renting will continue to be more and more expensive, as demand is still high as not everyone can qualify for a mortgage, sadly.
If you do have the ability to qualify right now, however, the new first time buyer statistics should act as an incentive that many people like you are seizing this moment to break the renting cycle. You should equally be aware that circumstances can change fast and playing a waiting game could result in a far less attractive home buying proposition, if you put the decision off until next year, by which time there will be a new administration in Washington, irrespective of who wins the election on November 8th - an event that is only likely to feed uncertainty as it approaches.
And never forget that, with mortgage rates at what we must assume to be at or near rock bottom, your buying power at the moment is tremendous. So even if waiting doesn't kill your chances of buying your own home, you may not be able to afford one of the same standard that your money will currently acquire for you.
I completely accept that not everyone can take advantage of the situation, but I would strongly urge those renters with good credit and general financial standing, or even those who were turned down for a mortgage in the past but think they might now qualify, not to waste a moment.
As ever, don't hesitate to contact us if you're thinking of buying or selling a home that would be perfect for the increasingly important first time buyer sector.