Two things of note from NAR’s August existing home sales report: First-time buyers make up about 31% of the market, and distressed sales (foreclosures and short sales) only make up about 22%.
(Note: Just in case it’s not clear, those numbers are mutually exclusive. They overlap, but there’s no way to know by how much.)
Why is this interesting?
First, the first-time-buyers number is about what it was a year ago — it’s down one percent, but that’s pretty much statistical noise. And the number of investors buying is down from 22% in August 2011 to only 18% this year.
Which means that the recovery isn’t just being fueled by investors — regular folks are still the majority of the market, and in fact are becoming more the majority. That’s good for long-term economic health.
Further, keep in mind that “first-time buyers” include people who haven’t owned in the past three years. Keep an eye on that number in the months ahead. Families who lost their homes to foreclosure are going to start buying again, and they’ll be classified as first-time buyers. So if my prediction of “shadow consumers” emerging is accurate, you’ll see that first-time-buyer number increase over the next year or two.
As for distressed sales, NAR says they’re at the lowest level since NAR began tracking it a few years ago. (Sorry, I don’t know the exact date.) More good news.
It’s a slow recovery, but it’s showing up in more and more numbers.