First-Time Homebuyers More Active Than Expected
NEW YORK (BankingMyWay) — With so many young Americans out or work, or at least underemployed, the thinking among economists was that fewer consumers would be buying so-called starter homes.
On the surface, that makes sense.
Unemployment among U.S. 18- to 29-year-olds is at 16.1%, according to Generation Opportunity, a youth advocacy group in Washington, D.C. Fewer would look for starter homes, simply because they can’t afford them.
But the reality is different, according to a study from J.D. Power.
The firm’s Home Buyer/Seller Satisfaction Study is out, and it shows first-time homebuyers have been “more active” this year — that 49% of all new homebuyers were first-timers, compared with 40% last year.
In addition, first-time home sellers — made up largely of Americans under 40 — are 44% of home sales this year, compared with 30% last year.
The J.D Power study seems to indicate that younger home consumers are like all home consumers. With home prices down, and mortgage rates still highly reasonable, 20- and 30-somethings jumped at the chance to buy their first home, even if they really had to stretch their budgets to pull the deal off.
The J.D. Power report also shows that homebuyers of all ages believe in recognizable brands when choosing a real estate company to partner with on their new-home hunt. About 35% of all homebuyers say that “reputation” is at the top of the list of priorities when choosing an agent, and believe that it’s best to choose a real estate company based on its “good name.”
Even so, it’s the face-to-face, one-on-one relationship that really counts to those first-time buyers.
“A real estate company’s agent remains the most important aspect of the customer’s experience among first-time and repeat homebuyers and sellers; however, customer loyalty is first to the company and second to the agent,” says Christina Cooley, director in the diversified services industries practice at J.D. Power. “Interestingly, less than 20% of customers say they “definitely will” switch real estate companies if the sales agent moves to another company.”
There’s little doubt that lower home prices are enough to lure younger homebuyers to the table. J.D. Power says the average U.S. listed home price has dropped from $225,000 last year to $200,000 this year.
Thus it appears the lower end of the U.S. housing market is healthier than many economists imagined. If the economy improves, that end of the market should only grow stronger.
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