First-Time Homebuyers Began Exodus from Housing Market In April, Latest Campbell/Inside Mortgage Finance Survey Reveals
WASHINGTON DC (May 24) – First-time homebuyers started to desert the housing market in April, ahead of expectations, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions.
The closely-watched survey found that 43.4% of April’s home purchase transactions were attributable to first-time homebuyers, a significant drop from March’s figure of a huge 48.2%. For the winter months of January to March, first-time homebuyer participation had been growing at a rapid clip; April’s data represents a clear reversal in the trend.
Although first-time homebuyers had until April 30 to sign a home purchase contract (and close by June 30) to qualify for an $8,000 tax credit, the new survey results show that first-time homebuyers were reducing their activity even before hitting that deadline.
“We were surprised to see the early decline in first-time homebuyer participation,” commented Thomas Popik, research director for Campbell Surveys. “When the tax credit was expected to expire last November, we saw a peak of first-time homebuyers in October. Now the first-time homebuyer peak appears to have occurred not one month, but two months early.”
Importantly, the survey results revealed that existing or current homeowners picked up the slack from first-time homebuyers, expanding their share of the home purchase market from 33.5% in March to 38.7% in April. Current homeowners qualify for as much as a $6,500 tax credit that also expired April 30 for purchase contracts.
Separately, the proportion of damaged foreclosed properties or so-called real estate owned (REO) sold during April plunged. Damaged REO accounted for 15.4% of transactions in March, but only 12.8% in April. One reason for the drop in damaged REO may be increasing numbers of short sales.
Short sales – where the home is sold for less than the mortgage amount outstanding and with lender approval – represent a way to resolve homeowners in default without going through the foreclosure process. Short sales were the largest portion of the distressed property housing market in April with 17.9%, the survey found.
The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions surveys more than 1,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.
For more information on the survey contact: John Campbell at Campbell Surveys, (202) 363-2069, firstname.lastname@example.org.