From the WSJ Real Estate Journal:
Declining Affordability Pushes Homes Out of Reach for Some
Despite low mortgage interest rates, a smaller percentage of first-time home buyers are entering the market, according to an annual profile of buyers and sellers released by the National Association of Realtors on Saturday.
During the year ending in June, 36% of all buyers who purchased a home were first-time buyers, according to the association’s annual profile of home buyers and sellers. That’s down from 40% a year ago. About 7,500 buyers and sellers were surveyed.
Part of the reason for the declining share of first-time homeowners: Declining affordability for those entering the market after the housing boom of the past couple years bumped up home prices, said David Lereah, the NAR’s chief economist, during a news conference held at the Realtors’ annual convention here. A greater number of second-home sales also may have contributed to a lower percentage of first-time buyers overall.
“I hope that it’s not a trend. I hope that as affordability starts to improve we see more first-time home buyers,” he said. “It’s critical for the housing sector.”
The percentage of single female home buyers, however, inched up in the survey to its highest level on record. Twenty-two percent of all home buyers were female and on their own, up from 21% a year ago and up from 14% in 1995. In comparison, single males accounted for 9% of home buyers, unchanged from last year.
You think?
“I hope that it’s not a trend. I hope that as affordability starts to improve we see more first-time home buyers,” he said. “It’s critical for the housing sector.”
So Lereah is calling for price drops? OK, I know that’s not what he was thinking he was saying, but that doesn’t mean it’s not what he was saying.
BTW, this problem was apparent in oh, 2003, but then the industry became more, what’s the word… “sophisticated” … yeah that’s it.
Geez
I just mentioned affordability in my last comment. Great minds think alike.
I have been yelling about affordabilty since
2003. I’m such a heretic!
KL
Affordability improvement: – Lower prices or high inflation due to wages spiraling up. in the second case all older people(retired people) are screwed as well as many baby boomers since their SS and Pensions will be calculated mostly from pre-inflated dollars…
But really that is the only way US will ever be able to pay off it’s national debt. It will kill the credibility of US country so no chineese/indians will lent any more money – which in term will mean no easy credit. but 10,000,000 starter home may become a reality in the next 10 years, – as I said baby boomers and older retired epople are the ones who must be very worried about that. They will not be able to even pay for foor with their pensions/SS checks. But hey they have voted Bush in second time and approved spending 200 Billions!!!! a year in Iraq.
hope that it’s not a trend. I hope that as affordability starts to improve we see more first-time home buyers,” he said. “It’s critical for the housing sector.”
At the same time, Mr. Lereah expects home prices will start picking up again in he spring. You can’t have your cake and eat it too.
…unless, of course, you just let the inflation genie out of the bottle and devalue our currency.
Read between the lines of Mr. Lereah’s sentiments; Now, we will actually work with first-time homebuyers.
It has been my experience in the past that realtors did anything they could not to work with a first-time homebuyer that may have been taking advantage of an FHA loan or a State or County down-payment assistance program.
Instead of having confidence in their buyer’s choice to seek responsible finacing, they typically steered them into those wonderful stated programs — “and just think, you can afford more than you could” (by actually proving your income/assets).
So good of Mr. Lereah to find his way to a moral conscience for the first-time buyer. It’s the perfect way to seem genuinely concerned about different sectors of the housing population, while idling his time until “home prices start picking up again”. Then he can toss them to the side or into the pool of stated, “let’s just get this thing closed” muck that fueled these idiots for so long.
This has been our problem, and is probably a problem for everyone going forward. We make a lot of money on paper, but have little savings and can’t afford to get into houses we can afford, if that makes sense.
The percentage of single female home buyers, however, inched up in the survey to its highest level on record. Twenty-two percent of all home buyers were female and on their own, up from 21% a year ago and up from 14% in 1995. In comparison, single males accounted for 9% of home buyers, unchanged from last year.
I wonder how many of them were tempted to flip a house after watching HGTV all week.