Despite motivating home prices and encouragingly low interest rates first time home buyers have been hesitant to dive into the pool of homeowners which is in turn affecting the housing market.
Market experts attribute the uncertainty to tighter lending standards, expired tax credits and fierce competition in the bidding war. Tighter lending standards are putting prospective buyers in a sticky situation and unable to meet credit criteria or proof of lengthy employment history. The fierce competition stems from an existing market where cash buyers accounted for 33% of existing home prices.
The National Association of Realtors reported that 34% of home buyers last month were first time home buyers. In a healthy market first time home buyers represent 40-45% of existing home purchases.