August 2015 Homebuyers Trend
According to data from The National Association of Realtors, 32% of existing-home sales in August 2015 came from first-time buyers. In fact, first-time buyer share increased by 4 percentage points from July 2015. Their buyer share also increased by 3% compared to last year.
When we say first-time buyers, this means, first-time homeowners. A demographic that is relatively young. This group is typically composed of young couples, young professionals, and people who are just about to start a family. Previous renters, who now have the capability to buy their very own house, are also part of this demographic.
So what’s the reason behind the powerful spending power of first-time buyers?
This increase in the spending habits of first-time buyers is due to sustained net job creation, a low interest rate environment (with 30-year fixed rates at below four percent for most of 2015), and better pricing of FHA-insured mortgages.
Low Interest Rates for the Rest of 2015
Rates are expected to remain around 0 to 0.25 percent at the end of 2015. The Federal Open market Committee announced today that the benchmark interest rate for short-term lending will remain at its current target level of 0 percent to 0.25 percent. According to Zillow Chief Economist, Svenja Gudell, “The federal funds rate, and in turn mortgage rates, remain low and will likely end the year roughly where they started it.”
This is good news for prospective new homebuyers who will remain to have some valuable wiggle room in terms of affordable markets.
The Builder Challenge
So, if you look at the statistics closely, it says that the 32% is for existing-home sales. This means that there is an equally ripe market for first-time homeowners who want to build their homes. Today’s generation is all about customization and personalization so there’s a huge chance that they will prefer a home that’s built specifically for them, instead of an old house that’s already out there. This is regardless of size.
In addition to this, even if they do buy existing homes, there is a huge potential for renovations and personalization. So for us builders, there is still a lot of opportunity that’s waiting to be seized.
The challenge is now up to you. How can you convince these buyers to spend their resources on building a new home instead of simply buying existing property?
How can you entice them to seal the deal with you instead of with previous homeowners?
How will you make your company stand out from other competing firms in your area? Will you charm them with unique design? Attract them with affordability? Or dazzle them with how fast you can hand-over their new house keys?
It’s up to you, dear builders. The clients are out there and the market is strong. Go get ém!