RE/MAX of New England Executive Vice President Jay Hummer, who overseas 250 RE/MAX offices throughout the region, this week released a report detailing first-time home-buying trends and what activity his offices has seen so far this year in New England. The 25-year residential real estate veteran spoke with Providence Business News about the findings.
PBN: You have just released a report about first-time homebuyers. What were the findings?
HUMMER: Through our First Time Homebuyer Outlook report, we’ve seen sales activity in New England pickup in many areas during the first few months of 2009, which is an indication that the housing market may have bottomed out.
In fact, many of New England’s major hubs are surpassing the national increase. [In February, for example,] transactions in Augusta, Maine, are up 6.21 percent. Hartford, Conn., is up 18.37 percent. Manchester, N.H., transactions are up 17.47 percent and Providence, one of New England’s hardest-hit states, is up 7.30 percent versus the same month in 2008.
Our focus groups showed that first-time buyers understand that it is an excellent time to purchase due to the large inventory of affordable homes, lower prices and, of course, the lower interest rates. However, there was a general lack of knowledge about the home buying process and the tax incentives available for first-time home buyers. The biggest roadblock with buying a home is a widespread fear of job security. Across the board, people are worried about losing their jobs.
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PBN: So what are the major factors that are pushing those first timers into the market?
HUMMER: What’s pushing first timers into the market might not be what you think. The $8,000 tax credit is widely misunderstood and buyers generally don’t understand that it’s a tax incentive – not a loan as it was in its previous iteration in 2008. What is really pushing buyers is the affordable pricing – home prices are at their 2003 levels right now. That, coupled with low interest rates, is really motivating folks. Also, the abundance of distressed sales is a huge initial motivator to first-time buyers. As a result of the number of distressed properties on the market, conventional listings are also lower in price, giving the buyers additional affordable options.
PBN: Your report also detailed first-quarter sales. How did the Rhode Island market fair, compared to the same period last year?
HUMMER: Across the board, sales in the first quarter of 2009 are down compared to 2008.
But, we need to remember that we weren’t in a recession at that point last year, the stock market was still healthy and interest rates were also low. But, what’s promising is our month-to-month growth for this quarter – we’re definitely seeing the signs of a healthier market.
PBN: Is Rhode Island doing worse than the rest of New England?
HUMMER: Not at all. Of all the New England states, Rhode Island had the smallest percentage change for the first quarter of 2009 versus first quarter of 2008 – a 10 percent drop. Of all the New England states, Rhode Island had the lowest percentage change. Compared to Vermont, which is down 39 percent over last year, it’s not bad
And sales of single-family homes and condos increased this February and March over January’s figures. In fact, the number of single-family homes sold statewide in February was 7.8 percent higher than a year ago at this time, despite Rhode Island’s high unemployment rate.
PBN: Have you started to see signs that the market is turning around?
HUMMER: Absolutely. Everything that I’m seeing throughout New England and throughout the country is pointing in that direction. The spring market is always a busy time in real estate. We are also seeing positive swings with several other economic fundamentals and President Barack Obama certainly has the nation buzzing with the economic stimulus and housing plans.
