Tuesday, February 15, 2011

First Time Homebuyers?

Why aren’t first time homebuyers buying homes especially with interest rates historically low and the inventory of homes remains high?

On LinkedIn, I presented the above question and had answers from a great cross section of professionals. I wanted to summarize the responses for your use:

FEAR:

Fear was by far the main reason for first time homebuyers not buying. Those that responded with an answer of fear indicated the following reasons:

Fear of the buying process – not understanding how the system works
Fear of losing their job and/or the lack of job security
Fear of their ability to make monthly payments
Fear of being “house poor”
Fear of the daunting loan process
Fear of qualifying and credit scores

There were other points of view which are of interest and first time buyers are cognizant of:
They are waiting for the market to hit bottom
Lack of confidence in housing to appreciate in the future
They want mobility
Housing industry is not stable
Not willing to accept responsibility of owning a home

It would seem to me that all of the above can be explained and investigated by first time homebuyers – if they were motivated to do so. Maybe the reasons are more structural than we think.

Maybe it is generational.
Are they motivated by a different set of factors?
After all, this really is the best time to buy --- inventory is high, prices are low and maybe going lower BUT interest rates may be trending up.


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