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Monday, October 4, 2010

First-time buyers buying down

A recent report from The National Association of Home Builders (NAHB) while the national median existing-home price for all housing types was $178,600 in August, up 0.8 percent from a year ago, sales of distressed homes rose to 34 percent, up from July, and were 3 percent over August of 2009. In our area the numbers have always been higher and stood at 45% at the end of September. That is actually very good for our area where distressed sales have been over 50% for the longest time. The median home price in the little market that I track was at $159,537 at the end of September, which shows the impact of the higher percentage of distressed sales.

These factors are affecting the way first-time buyers are buying. The NAHB report shows that there is a growing segment of first-timers looking for smaller and less expensive new homes. First-timers are a large market segment, with a reported 8.4 millions first-timers nationwide.

Bob Jones, chairman of NAHB says that builders are increasingly gearing their homes to the needs of first-time buyers. That trend is expected to continue in the period ahead as the economy begins generating more jobs and more people in their 20's form households. One reason that the homes need to be cheaper is that many of these first-time buyers are also first-time workers and are feeling the impact of the two-tier pay scales that were negotiated over the last few years. Older workers may be making $25-35/hour, but new workers are hired in at $15/hour for much the same work. They just don't make the money to to able to buy the bigger houses of the past.

New homes are also a better match for the needs of a population that is much more attuned to sustainability. Compared to what is typically available in the existing housing stock, they are more energy-efficient, easier to maintain and have designs better suited to today's lifestyles.

The NAHB report goes on to point out that this demographic of first-time buyers are, on average, buying homes with 1,874 square feet, though a whopping 46 percent are buying homes smaller than $1,500 square feet. With half of first-time buyers reportedly earning less than $60,000 a year, maybe this move could spell a new, more responsible, trend when it comes to spending? Wouldn't that be novel in America?

In our area most new-build projects are still stalled out as local builders find it difficult to get loans to build anything. I've noticed a few starts in what were stalled projects, but very few. The Lyon Township and South Lyon areas continue to show the most strength locally for new-builds. There is still appeal to being out along the I-96 corridor.

I can't identify the first-time buyers in the statistics that I track for my little 6-township market, but I have posted the final numbers for September. You can go see all of the statistics that I track, as well as numerous charts from national services at my Web sites - http://www.movetomilford.com/, http://www.themilfordteam.com/ or http://www.mihomebuyer.com/ (which is a first-time buyer oriented web site).

On an anecdotal note, recent historic home sales in the Village of Milford point to a minor recovery of sorts in that market, with recent appraisals supporting a rising price per square foot for well-maintained and updated historic homes. That's good news for my market and for the Village.

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