CLARK: Strengths and Weaknesses

First-time buyers in the real estate market decreased for the third straight year and is at the lowest level in almost 30 years. This is despite home sales increasing over the past twelve months. According to a recent report by the National Association of Realtors (NAR), the increase in home sales over the past year has been attributed to repeat buyers with two incomes.

The percentage of first-time buyers decreased to 32% in the NAR 2015 Profile of Home Buyers and Sellers report. In 2014, first-time buyers represented 33% if the market share. The percentage age of first-time home buyers this year is at its lowest level in 28 years when they represented 30% of the market. First-time buyers, typically, represent 40% of home buyers.

Low interest rates, jobs for college graduates and increasing high rents should increase the percentage of first-time buyers purchasing homes, but it has not done so. Increasing home prices and increasing rents have not made it easy for potential first-time buyers to save for a down payment on a home. There is limited inventory in first-time buyers’ price points, which makes it more difficult as well.

A quarter of potential first-time home buyers polled said that saving for a down payment was the toughest challenge and almost 60% reported student loans were adversely impacting their ability to save. The median amount of student loan debt is $25,000. This debt combined with other debt (i.e. credit card debt) is causing first-time buyers to delay purchasing a home until they can reduce their debt to qualify for a mortgage.

Repeat buyers, use the proceeds from their existing home to purchase the next. This sector represented 53% this year as compared to 47% in 2014.

According to Chief Economist of NAR, Mr. Yun, with first-time buyers sidelined, most home sales are coming from pent-up sellers seeking to benefit from increasing home values in their neighborhoods and using their home equity to move up or down size.

Further, 67% of home buyers were married couples a slight increase from last year. These buyers have the highest income among all home buyers.

Single females have been increasing as a percentage of home buyers in the past few years, but there share has started to fall off. Female buyers decreased from 16% to 15% in this last survey. The reasons being tight credit policies and having less purchasing power than households with dual incomes.

Forbes released Connecticut’s ranking in the nation for being best for businesses. Our state ranked 39 overall; for business costs — 45, for labor supply — 25, for regulatory environment — 41, for economic climate — 44, for growth prospects — 29; and for quality of life — 4.

Connecticut reported a 1.6% increase in job growth; and the cost of doing business is 10.8% above the national average.

Mary Ann Clark is a realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]

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