Thursday, September 4, 2008
In her wonderful article, Inside the Mind of the Consumer, in the September issue of REALTOR magazine, author Wendy Cole quotes a top Chicago broker as he answers the question, “What exactly are buyers and sellers seeking these days?” His answer:
“Nordstrom service, Disney innovation, and K Mart prices!”
Today’s “First Time Homebuyer” is a completely different consumer, or “mutant” as one of my salespeople might say, than the FTHB of the past! They have access to too much information and despite all that information, and misinformation, at their fingertips, they seem to take an almost “whimsical approach to determine fair pricing.”
As reflected in yesterday’s lesson, today’s FTHB is convinced prices will drop further. When presented with the data that shows that even if home prices do fall another 10%, and interest rates rise just a half a percent, they will actually be paying more (monthly) for the same house; they just nod their heads and stick to their guns! Why?
For one, very simple, reason: They don’t have to buy!
They want to buy but they want to buy the home they grew up in. They don’t want to “start out”, they want to “move in” and move on…
FIRST-TIME HOME BUYER EXPECTATIONS FOR ‘MOVE-IN’ CONDITIONS MAY CONFLICT WITH THEIR DESIRE FOR AFFORDABILITY
New Coldwell Banker® Broker Survey Reveals Possible Disconnect
in First-Time Home Buying Process
PARSIPPANY, N.J., (Aug. 21, 2008) – First-time home buyers are primarily concerned with affordability when choosing a new home, but their expectations may be too high relative to their current financial buying power, according to a recent Coldwell Banker® survey conducted among its brokers. While nearly half of the Coldwell Banker broker respondents reported that affordability was the No. 1 concern for this group, 81 percent said today’s first-time home buyers consider move-in conditions to be very important when searching for homes. In contrast, only 7 percent are looking to purchase “fixer-upper” homes that they could buy at a lower price and renovate themselves.
“In the past, first-time home buyers were willing to purchase older, more basic houses in an effort to save money and break into homeownership,” said Jim Gillespie, president and chief executive officer, Coldwell Banker Real Estate, LLC. “Today, this group has greater home expectations because they have grown up more accustomed to their parents’ lifestyles. It is important for first-time homebuyers to remember that by considering a ‘fixer-upper’ for their first home purchase, they can build equity over time and move up and into their second-stage home that better reflects their expectations.”
Survey findings also suggest that first-time home buyers worry more about credit ratings and approval than they did a decade ago, but less about down payments. This may be because they have saved money themselves, or have received additional support from parents to help their first-time home purchase.
According to 29 percent of brokers surveyed, first-time home buyers were more concerned with down payments 10 years ago than anything else, while only 17 percent said this is the biggest concern in today’s market. Meanwhile, survey respondents said that only 4 percent of first-time home buyers were worried about their credit scores in 1998, while 14 percent said it is more of a concern today.
“Owning a home is a great investment that will provide tax breaks, financial gains – as well as considerable joy over the years,” Gillespie said. “First-time home buyers now have higher standards, placing an increased focus on the financial aspects of home ownership and at the same time, want a larger home they can live in right away.”
Additional key findings from the survey include:
· 71 percent of brokers noted that first-time home buyers are looking for larger homes than they were 10 years ago.
· According to 41 percent of the respondents, proximity to job is the No. 1 attribute first-time home buyers are looking for in a home.
· 35 percent of the survey respondents said “investment” is the No. 1 reason first-time home buyers are making their purchase.
· 46 percent of the survey respondents reported that first-time home buyers look at five to 10 homes, on average, before making a purchase.
In addition, the survey explored initial reasons that a first-time home buyer contacts a Realtor in today’s market and how that has shifted from 10 years ago, according to the Coldwell Banker brokers:
Today’s Market vs. 10 Years Ago:
They are ready but want assistance in the process, including identifying neighborhoods, negotiating of price and paperwork: 73% vs. 32%
Because that is what they feel like they are supposed to do: 3% vs. 28%
To view houses / do walk-throughs: 17% vs. 30%
To help with navigating mortgage issues: 1% vs. 4%
They are not ready but trying to better understand the process: 6% & 6%
Methodology: Coldwell Banker Real Estate LLC conducted an online survey about the trends real estate professionals are seeing with first-time home buyers. The survey yielded responses from 150 Coldwell Banker brokers across the United States.
Wednesday, September 3, 2008
"We want to be in our new home before school starts."
Traditionally, these words meant the three months of June, July and August were our biggest closing months here at the Jersey Shore. But if we compare 2007 with 2008, two of those three months were down from the same time last year and August of this year was significantly below August of 2007:
Category - Single Family-Toms River
Mo/Yr Monthly Sales Avg List $ Avg Sale $ % Diff Sell/list Avg DOM Curr Inventory Mos Inventory
June 2007 88 $445,644 $425,660 95.52% 80.0 871 9.90
July 2007 81 $402,287 $383,148 95.24% 76.0 877 10.83
August 2007 90 $403,178 $381,372 94.59% 100.0 860 9.56
June 2008 95 $455,884 $427,894 93.86% 99.0 829 8.73
July 2008 79 $391,795 $372,642 95.11% 95.0 806 10.20
August 2008 65 $361,688 $343,605 95.00% 100.0 786 12.09
What do these numbers mean?
Well, lets go "Back to School"!
As we can see, there were 95 closings, in Toms River, in June of this year, compared to 88 in June of 2007. Which means that these homes probably went under contract in April and May (Peak Selling Season). Nothing new here...
But when we look at July and August of 2008, compared to the same time last year, the data tells us that the homebuyer took the summer off! Why? Good question.
The homebuyer who bought in April and May and closed in June of 2008 was the traditional Nuclear Family. They wanted to be in their new home before school started! But what about the homebuyer who bought, or didn't buy, in June, July and August?
The NAR (National Association of Realtors) estimates that 40%* of all homes purchased this year (2008) will be purchased by First Time Home Buyers! These particular buyers are far different than their predecessors of the last "buyers market", 1990-1993.
Tomorrow, we will go back to school and examine exactly what today's First Time Homebuyer thinks, wants and buys!
*This percentage is probably higher locally (Ocean County, NJ) by about 5%.