Hope is on the horizon for the housing market to rebound as new buyers now have the ability to enter the market.
Homes are at all-time low prices, allowing first-time home buyers to gain access to the market. This – in theory – enables current sellers to find a buyer and move up to a larger home. It is hoped this process will lead to the production of new homes also.
Americans have suffered through an economy in low gear for too long. Perhaps first-time buyers will provide the much needed catalyst to stimulate the economy and put us back on the right track.
Source Fortune:
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If prices are going to stabilize, let alone rebound, the United States needs to produce far more first-time home buyers than new houses. That's the only way to tame the glut of "For Sale" signs dotting front yards from the Inland Empire of California to the Gold Coast of Florida. … The key player in any recovery scenario is the first time buyer. The housing market operates with a pronounced laddering or ripple effect. When entry-level buyers flood the market, they not only stimulate production of new homes, they purchase existing homes. Those purchases, in turn, allow the sellers to move up to bigger houses. Today, newbies are coming back. Why? For the first time in years, entry-level homes are affordable. Builders have slashed prices, and what they’re building tends to be far smaller than the McMansions of the boom, selling for far lower prices. KB Home’s average selling price dropped to $248,0000 in its February quarter, versus $267,000 a year earlier. In 2006, KB’s basic model in Victorville, Cal., a former boomtown east of Los Angeles, took up as much as 3,800 square feet and sold for $328,000. Today, its stripped down offering goes for $220,000, at less than half the size. |