The National Association of REALTORS® reports even as existing-home sales nationwide eased in March, first-time buyers appear to be responding to low mortgage interest rates and tax credits.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 3 percent to 4.57 million units in March from 4.71 million in February, and were 7.1 percent lower in March 2008.
NAR chief economist Lawrence Yun said the market appears to be stabilizing with modest monthly ups and downs, and that first-time buyers are driving the market. "The share of lower priced home sales has trended up, indicating a return of many first-time buyers, which we also see in a parallel member survey," he said. "Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans."
The national median existing-home price for all housing types was $175,200, down 12.4 percent from March 2008. Distressed properties, which accounted for just over half of all transactions in March, typically are selling for 20 percent less than traditional homes.
An NAR practitioner survey in March showed first-time buyers accounted for 53 percent of transactions, based largely on contracts offered before the $8,000 first-time home buyer tax credit became available. "Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit," Yun said. "By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions."
NAR President Charles McMillan said first-time buyers are crucial at this stage of a housing recovery. "The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down, according to their needs," he said.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 5 percent in March from 5.13 percent in February; the rate was 5.97 percent in March 2008; data collection began in 1971.
"If you have a solid job and good credit, now is good time to buy a home," Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS® said. "Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels."
Keady, who is a REALTOR® with Alain Pinel Realtors in Palo Alto, added, "Inventory is up, which means buyers have more homes from which to choose, and with that comes more negotiating power. Interest rates and state and federal incentive programs out there for buyers are the best I have seen in my long career."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.