Homes Sales Up in the Second Quarter of 2015, Thanks to First-Time Buyers
Real estate is hitting its strongest pace this year, with homes sales up 3.2 percent in June to a seasonally adjusted annual rate of 5.49 million. According to a recent blog post by the real estate titan Keller Williams Realty, the market performance in the second quarter of 2015 shows the promise of a healthy market that is recovering at a comfortable steady pace. One major contributor to the strong real estate numbers is the rise of first-time home buyers, who were relatively inactive in the years following the Great Recession.
Before the Great Recession changed the real estate game, first-time home buyers made up roughly 40 percent of home buyers. In May, they made up 32 percent of home buyers, which is up from 27 percent at the same time last year. According to the KW post, “First-time home buyers are important in the housing market because they fuel additional demand allowing existing home owners to ‘trade-up.’” Also, with the rental market becoming more challenging, many first-time home buyers are jumping on the opportunity to save money on high rent by paying lower mortgage rates.
As loan rates remain low and low rental inventory contributes to skyrocketing rents, many see buying a home right now to be a more financially sound investment than renting. The preference shift from renting to buying is further proven by new research by TD Bank which indicated that nearly one-in-five potential first-time home buyers are actively looking to buy their first home. The study by TD Bank also found that first time home buyers are interested in home with amenities including a backyard or pool and an attractive design as well as energy efficient / smart homes technologies.
Although amenities such as a backyard or pool and attractive design have historically been popular choices for home buyers, the advent of smart homes technologies has become popular with millennial buyers. According to the KW post, “The average age of first-time home buyers is 31. This puts them in the millennial category. Millennials are notoriously connected to technology.”