Since early fall 2008, much has been said and written about the importance of first time home buyers to the stability of the housing market. Most tenured real estate professionals understand the domino affect that can occur by way of the first time home buyer.

Historically speaking this mind set has absolutely been the truth. As first time home buyers entered the market, it allowed the sellers of the preexisting home to move up which in turn allowed another family to move up, etc...

In my experience as a Certified Mortgage Planner for 10 years in Chesterton Indiana, the normal series of home transaction would result in the following home purchases: First Time Home Buyer --> Family Home --> Executive Home --> Luxury Home --> 2nd/Vacation Home --> Empty Nester. This is not to say that this happens in this exact sequence every time.

This domino effect has been the focus of Congress, National Association of Home Builders, National Association of Realtors and anyone else associated with the real estate industry. There is just one problem.This housing downturn is like no other before it due to the nature of the financial crisis.

In my local real estate market in Northwest Indiana and I'm confident in yours as well there is a missing domino. What could it be?

Think about what kind of homes the first time home buyer is actually purchasing.

Is it a property that involves any of the following aspects: new construction, foreclosure, sheriff sale, bank owned, REO, distressed, HUD repo, abandoned, bankruptcy, rehab, etc... If any of these scenarios are true the first time home buyer is not initiating the domino effect because there is no traditional seller to move up.

Did you catch that? No move up buyer. That is why sales ranging in value up to $100,000 is up in every region of the country while sales above the $250,000 threshold are down year-over-year.

Although significant, First Time Home Buyers Are Not ALL That!