RISMEDIA, December 23, 2009—According to the 2009 Profile of New Jersey Home Buyers and Sellers, first-time buyers account for a larger portion of the housing market than in previous years, largely due to the impact of the federal home buyer tax credit. The survey results released by the New Jersey Association of REALTORS® (NJAR) found the number of first-time buyers in New Jersey rose to 52%. First-time buyers accounted for 49% of all buyers in 2008 and only 36% of buyers in 2007. When asked about the primary reason for the timing of their home purchase, 46% of first-time buyers said it was just the right time.
The median age of first-time home buyers in New Jersey was 31, with 72% having previously rented an apartment or house. Forty-one percent of first-time home buyers thought the mortgage application and approval process was either much more or somewhat more difficult than expected. However, a large majority (90%) of first-time buyers were not rejected by any lenders. Thirty-nine percent of first-time buyers utilized Federal Housing Administration (FHA) financing compared to 48% who utilized a conventional loan to finance their home purchase. Out of all buyers, 28% were financed through FHA and 63% obtained a conventional loan. Forty-three percent of first-time buyers cut spending on luxury items in order to make the home purchase a reality, compared to 40% of first-time buyers who did not need to make any sacrifices.
“2009 was a tremendous year for first-time home buyers and it appears as though the trend will continue into 2010 with extension of the $8,000 tax credit until the spring,” said 2010 NJAR President Judy Appleby. “Current homeowners considering selling their home should be encouraged by the increasing number of first-time buyers in New Jersey’s real estate markets as well as the added incentive of up to a $6,500 tax credit for the purchase of a new primary residence.”
A majority (57%) of all buyers viewed their home purchase as a better financial investment than stocks. An additional 22% of buyers believe their home purchase was at least as good of an investment as stocks.
The median price of a home purchased in New Jersey was $320,000 compared to $185,000 nationwide. Although it is typical for prices in New Jersey to be higher than national averages, a new measure in the report this year tracked the equity earned in homes recently sold. The median equity earned in the northeast was $63,000 or 44%, which was typically acquired within a tenure of 5-7 years in the home. Nationally, the median equity earned was $36,000 or 27% within 5-7 years in the home. This shows the rate of home equity appreciation in the northeast typically outperforms the national trend.
In New Jersey, new home sales were up at 14% of all purchases, compared to only 12% in 2008. Nationwide, new home purchases were at the lowest level in eight years- down to 18% of all recent home purchases.
The report also shows that consumers have come to depend on the expertise of real estate agents to guide them through real estate transactions. The survey found that 85% of home buyers used a real estate agent or broker to purchase their home, as compared to 84% in 2008 and 76% in 2007. Real estate agents were viewed as a very useful source of information by 80% of buyers. Sixty-six percent of buyers would definitely use their agent again or recommend the same agent to others.
Eighty-eight percent of New Jersey sellers were assisted by a real estate agent when selling their home. Nationwide, 85% of sellers used a real estate agent for their home sale. Recent sellers typically sold their homes for 94% of the listing price, and 64% reported they reduced the asking price at least once.
The typical New Jersey home seller owned their home for nine years and 56% of sellers traded up to a larger home when purchasing their next home (compared to 48% of U.S. sellers this year and 42% of N.J. sellers last year). According to the report, sellers listed the primary reasons for selling their home was the size of their home was too small (35%) or moving due to retirement (12%).
“This report indicates that although there may be reservations about spending, the need to provide a home and adequate living space for family exists despite the global economic climate, thus providing evidence that the housing market is approaching stabilization. Because housing and the economy are eternally linked, it is only a matter of time before both markets reach expected levels,” concluded Appleby.
For more information, visit www.njar.com.