by Bill McBride on 8/14/2009 01:03:00 PM
Friday, August 14, 2009
Yesterday I posted some data from Campbell Communications (National Data: Distressed Sales and Types of Buyers)
Here is a repeat of the graph by buyer type:
According to the Campbell survey first-time buyers accounted for 43% of sales in Q2 (investors another 29%).
Source: Summary Report--Real Estate Agents Report on Home Purchases and Mortgages, Campbell Communications, June 2009 (excerpted with permission)
These numbers are higher than the numbers reported by NAR for Q2:
"An NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May ..."However I believe the Campbell numbers are closer to actual.
I've talked with several people - and there is a buying frenzy right now. First-time homebuyers, especially those with a limited downpayment, are desperate.
From the Chicago Tribune: First-time buyers race to beat credit deadline
With a growing sense of urgency, first-time buyers are searching for homes, worried that time is running out on an $8,000 federal tax credit.Also from Reuters: Race is on as U.S. home buyer tax credit nears end
Real estate agents say they're seeing a surge of first-timers who want to close on a property by Nov. 30, the deadline for the credit. The rush has set off bidding wars and stirred up a normally quiet August market.
"We're inundated," said Paula Clark, an agent with Coldwell Banker.
To meet the Nov. 30 deadline, buyers need to have a contract by around Sept. 30, because inspections, mortgage approvals and other details typically take about two months.
"I am willing to settle for something" to finish buying quickly, said 20-year old Kielar, who works at the Denver County Jail, and is a part-time student. The tax credit carrot "is speeding up the process," she said, adding that "$8,000 could help remodel the house, redo carpets and cabinets."In addition $8,000 to the Federal tax credit, there are some state programs, as a nexample from Newsday.com: NYS rolls out tax credit for first-time home buyers - but most of the frenzy is being driven by the Federal Tax credit.
For loans backed by the Federal Housing Administration (FHA), which require a minimum 3.5 percent downpayment, the $8,000 can be also be applied upfront toward the purchase rather than later on tax returns like other mortgages.
A few key points:
Expect a surge in existing home sales (and some new home sales) over the next few months. Expect prices at the low end to rise (simple supply and demand). Expect all kinds of reports that the bottom has been reached.
Expect the frenzy to end ...