Trying to imagine what the market will look like when it turns around? Keep your eye on the first time home buying activity, not just in the U.S., but also worldwide.
According to the president and CEO of Royal LePage Real Estate Services in Canada, “…first-time buyers will be the engine that drives Canada’s housing market in the months to come.”
Currently, first-time buyers represent 40% of all real estate transaction in Canada, which is down from the 70% peak a few years ago. “When first-time buyers don’t buy, it’s really like sand in the gears of the real-estate market,” he said.
In the U.S., real estate agents nationwide are currently updating their market conditions reports to reflect the new Spring Market in their local areas. Many of these agents are reporting to HouseHunt.com that “first-time home buyers are the greatest activity in their markets.” Nearly six months ago, the first-time home buyers were even with the repeat buyers in many cities in the U.S. according to HouseHunt.com’s 2008 3rd Quarter Survey (Q3 2008).
Fast forward to the 4th Quarter in 2008, HouseHunt.com CEO Michael Bearden says, “Our fourth quarter random survey of HouseHunt member-agents showed that first-time buyers accounted for 65% of existing home sales – up from 46% in the first quarter of 2008 – and nearly double the normal ratio between repeat and move-up buyers.”
With preliminary results for the 1st Quarter of 2009 showing an abundance of first-time home buyer activity, could the U.S. be at a “half-way point,” like its northern neighbor? It wouldn’t be surprising since there are many new programs in place to motivate the qualified first-time home buyer to make a purchase. The new FHA loan limits that were signed into law last month create an opportunity for any qualified buyer to purchase a home today at an incredibly low interest rate.
Combined with the first-time home buyer credit, today’s real estate market has what’s necessary to turn around.
