Are there a lot of homebuyers out there? It almost seems like 2004 with slews of buyers and buyers’ agents hounding listing agents with multiple offers and offers above listing price. True, the owners (or listing agents) of many REOs, short sales and even normal sales buyers may price below market price but people remain hungry to buy.
We not just talking investors but the demand continues to rise sharply as first-time buyers seek entry-level homes, the share of first-time buyers surged from 36 percent in 2008 to 47 percent in 2009, and increased for the third consecutive year. The proportion of first-time buyers exceeded the long-run average of 39 percent, and the share marked the highest since 1995 when more than half of all buyers were first-timers.
The big picture numbers show that improvements in housing affordability plays a huge role in the increase in the market share of first-time buyers. With the perfect storm of lower prices and historically low mortgage rates, affordability improved dramatically in 2009, creating great opportunities for well-qualified buyers who have a steady job and stable income situation.
We’re expecting home prices to continue to rise slightly but the housing affordability index will remain around 60 percent throughout 2010, keeping those opportunities open to future homebuyers.
We’re not forgetting about the federal tax credit, which motivated many first-time buyers’ to jump into the buying market. Of those surveyed, 69 percent said that the federal tax credit was either “very important” or “most important” in their home buying decision. According to the C.A.R. “2009 First-Time Home Buyers Tax Credit Survey”:
• Over nine in ten first-time buyers (94 percent) were aware of the tax credit before they purchased their homes.
• Four out of ten (39 percent) first-time homebuyers in 2009 said they would not have purchased a home if the federal tax credit for first-time homebuyers was not offered.