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Wednesday, July 31, 2013

First-Time Home Buyers are Declining: Reasons for the Trend and Tips on How to Reverse It

The first-time home buyer market is shrinking this year, taking a percentage of buyers that normally make up as much as 40% of home purchases.

The Wall Street Journal first reported the trend last week, noting that first-time home buyers accounted for only 29% of purchases of existing homes in June, compared with 32% in June 2012.

A number of reasons come into play, including rising interest rates, a more competitive market, and a higher rate of unemployment amongst traditional demographics of first-time home buyers.

Even for those first-time buyer prospects who are unemployed and able to purchase, they may not feel like they are ready.  Those who better understand the process tend to be more nimble to move quickly on decisions and follow the process they are familiar with. That can prove intimidating for someone who is entering the market for the first time.

Perhaps the best way to overcome the "uncomfortability factor" is through education. The timid first-time home buyer wants to know if now is right. They want to know if the rising home prices they’ve noticed should continue to rise, or might level out. They want to know if there’s a chance that the market might tank entirely, as it did just a few short years ago. They want to know if it might make more sense to rent for now, while waiting to see what will happen in their young professional lives, and if they’d be able to get a good return on their investment if they were forced to sell to relocate in a few years.

That first-time home buyer hasn’t bought as many houses over the past year, and the truth of the matter is they may not buy in the near future. They might find a tougher time getting financing, fulfilling a worthy down payment, or finding the right job that allows them to confidently make the first major investment in their lives. Maybe they’ve tried to make an offer or two and have been turned down for cash offers or larger down payments that sellers just can’t pass up in an uncertain economy. Maybe they’ve grown discouraged by the entire process.

There are hundreds of reasons why the first-time home buyer isn’t buying the home right now, but all lead to opportunity. This market segment isn’t growing any younger, and they’ll soon need to rely on a good real estate agent and brokerage that can help them through the process, whether that is in the second half of 2013, or a year or two down the road.

The brokerage and agent that helps educate them now will be in the best position to earn their business when that time comes. And you better believe the vast majority of prospective first-time home buyers will start their property search online, or look to a blog to read about the current market conditions and the movement of their local market. They’ll try to find reliable advice, and they’ll look to connect through social channels with the agent who is able to provide it to them. They might even turn to social channels to seek advice from their friends who are a few steps further in the process, and look to link up with those agents their friends have connected with through social channels.

Those looking for their first home tend to be heavily dependent on these channels, and they want to do their own research and find the information they require to help secure their decisions, whenever those might come.

A few of the items you’ll need to best tap into this market and appease those home buyers include the items we spend a lot of time discussing here…a good real estate website that allows you to customize it and make it your own; the best and easiest property search; a mobile website they can easily find through a search engine and use to quickly nail down info on that property that intrigued them.

They also want detailed information spelled out to them through a channel they can read without feeling like they’re being sold to. They’ll look for a good real estate blog to provide some of this info. They might be willing to sign up for an email list to receive more of it. They’ll definitely be attracted to those detailed Market Watch reports that will provide ongoing access to educational info they are looking for.
Communication tools like Market Watch will educate your first time home buyers

The first-time home buyer might operate a bit differently than traditional home buyers have. They might even make up a smaller percentage of our recovering real estate market. But they aren’t going away, and every one who doesn’t buy now is another who will need to in the near future.

Sometimes a decline in one significant market segment can signal an opportunity for the near future of your business. Savvy agents and brokerages will look at these signals to prepare for business growth. And they’ll utilize technologies and platforms that best position them to leverage those opportunities as soon as they culminate into transactional situations.

Prepare yourself for those real estate business opportunities. Contact Delta Media Group for more information.

About Delta Media Group, Inc. 

Serving over 600 real estate brokerages, 35,000 agents and 225 MLS's across the nation, Delta Media Group is the enterprise marketing and business management solution for real estate professionals. Delta partners with companies and top-performing agents where marketing meets technology, helping clients efficiently grow their businesses from lead to close. For more information about Delta Media Group, visit www.DeltaGroup.com.  
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