2009 Recap: First-Time Buyers Pushed the Illinois Real Estate Market

The Illinois Association of Realtors (IAR) told us officially today what many of us knew from our personal experiences this year: more than half of home buyers in 2009 were first-timers and the vast majority of buyers used a real estate agent to help guide them through the process of aquiring a home. 

The IAR attributes the rush of first-time buyers in 2009 to the one-two punch of the Federal tax credit and increased affordability of homes.

The 2009 Profile of Illinois Home Buyers and Sellers survey, which was released today, found 51% of Illinois buyers were first-timers, compared to 47% nationally. Since 2001, the nationwide first-timer percentage has been closer to 40%.

Forty-six percent of first-time buyers said it was just the right time when asked why they bought in 2009.

“2009 has been a strong buyer’s market and in particular for the first-time buyer who was able to take advantage of the low interest rates and more affordable home prices and large supply of homes on the market,” said Mike Onorato, GRI, president of the Illinois Association of REALTORS®. “We should see this trend continue early in 2010 as the $8,000 first-time buyer tax credit has been extended through April 30 and expanded to include a tax credit for long-time homeowners of up to $6,500.”

IAR's survey also took a look at some important demographics for 2009's buyers.

• The median age of first-time home buyers was 29 years old and the typical repeat buyer was 45 years old.

• First-time buyers reported a median income of $64,400 and repeat buyers had an income of $92,800.

• Forty-seven percent of first-time buyers financed their home purchase with FHA (Federal Housing Administration) loans compared to 38% who used a conventional loan. Out of all buyers -- both first-time and repeat -- 33% used FHA and 55% obtained a conventional loan.

• Seventy-five percent of first-time buyers had been renting a house or apartment prior to buying their home.

• Twenty-five percent of first-time buyers were single women and 13 percent were single men. (My personal stats for 2009 found more single men buying for the first time than single women, but that is simply anecdotal information.)
  

• Nine out of 10 buyers began their home search on the Internet.

What types of homes did buyers choose? Existing homes won the hearts and pocketbooks of most. New construction home sales were at the lowest level in eight years nationally — down to 18 percent. In Illinois, just 14 percent of homes sold in 2009 were new.

Sixty-seven percent of all home buyers in Illinois purchased a detached single-family home, 22 percent bought an apartment/condo and 8 percent chose a townhouse. In my territory -- St. Louis' Illinois suburbs -- the overwhelming majority of homes purchased were single family. The urban Chicago area tends to skew condo/townhouse sales figures for the state.

The IAR survey also asked buyers what factors they considered important when buying their home in 2009. Answers included:

• commuting costs,

• quality of the neighborhood

• convenient location to job

• overall affordability of homes

• convenient location to friends and family

Eighty-nine percent of Illinois' 2009 buyers reported using a real estate agent to help them acquire a home and they noted that these professionals assisted them in a number of ways, including helping them understand the complex process of buying real estate, pointing out unnoticed features in the property and negotiating the terms of the contract on the property the buyers' ultimately chose.

For more information on the 2009 survey, visit www.illinoisrealtor.org.

If you're thinking looking at homes for sale n Edwardsville, Glen Carbon, Maryville, Troy, Collinsville and other communities in St. Louis' Illinois suburbs, now is the time. Interest rates are low. Inventory is high. And the tax credit is good for properties under contract by April 30. As BusinessWeek reminded us this month, "If you don't buy a house now, you're stupid or broke."

Here's looking ahead to a great 2010 for those of you who ready to buy your Illinois home.