Tanking prices have certainly drawn the newbies in; J.K. and Nicole Harvey, for example, just snagged a three-bedroom Dutch colonial in Trumbull, Conn., on a corner lot—after bidding $50,000 less than the asking price. Low interest rates and a new federal tax incentive are making a difference too. But more than anything, first-timers are benefiting from not being homeowners. They don’t have to worry about selling their current homes, most likely in a down market, to raise money for new ones. “The world is their oyster right now,” says Mike Larson, real estate analyst with Weiss Research.
Small wonder that agents are now gladly tagging along as the “kids” kick the tires on starter homes. That’s a big change from the way things used to be: For most of this young century, the real estate scene was dominated by homeowners trading up, flipping properties or snapping up vacation homes. Bubble-driven prices meant that even “starter homes” were out of reach for younger couples. Brokers and agents shunned first-time buyers because they needed too much hand-holding and, of course, because they weren’t that lucrative—why waste time peddling $150,000 condos when you could make seven times as much money selling a single $1 million McMansion? But today, new buyers with humbler aims are just as likely to get the red-carpet treatment.
Right now, of course, buyers of all stripes face what seems like an unprecedented opportunity. This year the housing affordability index reached its highest point in almost 40 years. But not every “SOLD” sign is a marker on the path to prosperity. Despite signs of improvement in a growing number of markets, hardly anyone expects a quick return to boom times. That’s partly because first-timers are more willing to scoop up bargains at the bottom end of the market than jump into a bidding war. And buying a home can be trickier and scarier than ever. Still, virtually everyone agrees that the housing market won’t fully recover until buyers soak up the bloated inventory of available homes—in other words, until the rookies come through.
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