As I go thru my email today the
familiar Lowe’s real estate newsletter comes into
view. “Survey
Reveals Possible Disconnect in First-Time Home Buying Process”.
Hmm … really? I’m curious as
to what buyers are always thinking and read on as to what the survey
produced. I’d thought I would pass it along to you
with my comments about the market conditions. It’s
actually quite enlightening!“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% said today’s first-time home buyers consider move-in conditions to be very important when searching for homes. In contrast, only 7% 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 home buyers 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.”
Well that should be an eye opener to alot of people! I really think that CB did a great job with this survey from their brokers on buyer expectations and it serves to reinforce my own thinking over the last few years. Buyers are expecting a whole lot more than they can afford. The home in their “minds eye” is that of a 4BR Colonial with the half acre and the 3 car garage. Problem is, they just started out in the work force so the pay does not equal what they expect to purchase. Unpleasant realization sets in when they have to compromise their desires.
I’ve noticed that the majority of buyers just don’t want to do ANY work. ANY being really none, zero. No wallpaper removal, no painting, for heavens sake no kitchen remodel! I’ve
also noticed that buyers are
becoming “overwhelmed” with the process remodeling
entails even in their heads. So a warning to all sellers
reading this – your agent is not making this stuff
up! Buyers do not want to remodel your house! They
don’t want to change the 80’s wallpaper that you
don’t even like any more! Another point is that I can’t find any buyers that want to buy a fixer upper and work their way into equity. I just realized it but I haven’t had a buyer say that to me in quite sometime. So I guess forget about that concept!
"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% of brokers surveyed, first-time home buyers were more concerned with down payments 10 years ago than anything else, while only 17% said this is the biggest concern in today’s market."
I’ll have to agree here, but I think the mortgage debacle that just went thru the media has buyers questioning if they even can afford a home. Rumors have already taken hold or I believe the buyers would be out there scooping up some of these great deals I come across every day. Buyers are now a little more sophisticated and know that as long as their credit is good, there will probably be a lender out there to help them.
"Meanwhile, survey respondents said that only 4% of first-time home buyers were worried about their credit scores in 1998, while 14% 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% of brokers noted that first-time home buyers are looking for larger homes than they were 10 years ago.
- According to 41% of the respondents, proximity to job is the No. 1 attribute first-time home buyers are looking for in a home.
- 35% of the survey respondents said “investment” is the No. 1 reason first-time home buyers are making their purchase.
- 46% of the survey respondents reported that first-time home buyers look at five to ten 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:
- They are ready but want assistance in the process, including identifying neighborhoods, negotiating of price and paperwork: Today’s market 73% vs. 32% 10 years ago
- Because that is what they feel like they are supposed to do: Today’s market 3% vs. 28% 10 years ago.
- To view houses / do walk-thrus: Today’s market 17% vs. 30% 10 years ago.
- To help with navigating mortgage issues: Today’s market 1% vs. 4% 10 years ago
- They are not ready but trying to better understand the process: Today’s market 6% vs. 6% 10 years ago.
This is all fabulous information for us all to know, both buyers and sellers and realtors alike. Sellers need to come around to the market conditions and understand that buyers do not want to pay top price for their house and then turn around and have to remodel it. In fact, the market suggests that no real work is wanted to be done by the buyers. So a market tip for sellers would be to do the work for the buyers for a faster sale. Price it right and show the buyer 'your' value over the others (less work involved).
Thanks for stopping by and reading my perspective and comments on this buyer survey!
Lyn Sims at RE/MAX Suburban (847)230-7324
"Blog Dog"©2008 Lyn Sims
RISMEDIA 8/26/08 Lowe's ENewsletter dated 8/26/08 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.