First-timers grow to 41% of homebuyers

Is the super-sized McMansion on the endangered species list? Well, if the growing horde of the currently budget-minded generation of new shoppers has their way …

National Association of Home Builders economists have dug deep into the Census Bureau’s freshest American Housing Survey to unearth some interesting trends about first-time homebuyers nationwide, perhaps most notably that 41 percent of the 8.4 million households who bought a home between 2007 and 2009 were rookie shoppers! First-timers comprised 35 percent of the homebuying populace in AHS studies involving the previous 2003-05 and 2005-07 study periods.

NAHB notes of the first-time buyer bulge: “Although some of the demand was fueled by the initial version of the home buyer tax credit in mid-2008, which was specifically targeted to those buying a home for the first time, the upward trend is expected to continue as children of baby boomers — members of a generation that is larger than their parents’ — move into their household formation years in the period ahead.”

Recent first-timers are younger, poorer and shopping for smaller homes, a trend NAHB thinks builders will grasp to reach the growing market niche. Details of the 2007-09 class of first-time buyers:

• Average age? First-timers were 34 vs. 46 in the move-up market.
• Average household? $67,000 vs. move-up’s of $97,000.
• Home price? $184,000 vs. $297,000 for trade-up buyers.
• Home size? First-timers bought 1,874 square feet on average vs. 2,549 for move-up buyers.
• New home? Just 13 percent of 2007-09 first-time buyers purchased new vs. new homes being 17 percent of all homes sold during that period. (Reason why? In 2007-09, new homes averaged a $315,000 price tag vs. $238,000 for “used” homes.)

Other first-time buyer trivia from the NAHB research:

• 82 percent bought detached homes.
• Top consideration was price (38 percent); next was home design (36 percent).
• Looked at 15 homes before purchase, on average.
• 22 percent had no downpayment vs. 25 percent in 2005-2007, as the NAHB put it, “reflecting a tightening of credit standards in the mortgage market.”