The president of The Money Source provides some insight on how to better reach first-time homebuyers, what’s most important to them right now, and what makes for an ideal location.
As one of the largest government lenders in the United States, The Money Source is uniquely positioned to identify trends in first-time homebuying. The Melville, New Yorkbased correspondent lender processes tens of thousands of Federal Housing Administration, Veterans Administration and U.S. Department of Agriculture loan applications, the vast majority of which are for first-time home purchases. The lender creates an annual top-10 list of which cities are hottest for individuals and families choosing their first home purchase.
For those builders who serve this market, Ali Vafai, president of The Money Source, provides some insight on how to better reach first-time homebuyers, what’s most important to them right now and what makes for an ideal location.
What surprised you most about this year’s list?
I was surprised that there weren’t any Northeastern States. The Money Source is a national lender, and although over 30 percent of the current book of mortgages we service are in the Northeast, we didn’t see a first-time buyer trend in the Northeast.
What trends do you see as far as the shifts in where first-time homebuyers are looking to buy?
It appears most of the states have a few things in common: Most have lower than the national average unemployment rates, or if they’re only slightly higher but in states that are business friendly with lower taxes for businesses which results in more jobs.
Therefore, an influx in job and business opportunities is a key factor in attracting the first-time buyers to the states on the list.
From a builder’s perspective, do you have any thoughts on changes in the first-time homebuyers markets beyond location? How has the way homebuyers select first-time homes changed?
Affordability is key for first-time homebuyers. Yes, everyone wants the perfect kitchen and master bath and walk-in closet, but that will increase the cost, and we see first-time buyers are willing to sacrifice on their “wish list” for now until they can buy their next home. Homes with enough space at affordable rates will sell quicker to first-time buyers.
What factors contribute to “hot spots” for first-time homebuyer locations?
In addition to being job friendly states/cities, the median home price in these locations are lower – much lower than the national average. It’s a great time to buy considering there are employment opportunities and inexpensive homes in these areas.
Any other thoughts or advice to builders seeking to better reach the first-time homebuyer market?
Considering the median price is well below the national average, builders should keep this in mind when determining the cost to build and price point of new development projects.
Is there a common thread among these growing markets – clues for builders who are looking for the next big first-time homebuyer market?
It appears tax friendly states are attracting more residents because of job creation. I found an article that shows the 10 worst states for business. California is on it, but the rest are mostly Northeast states. That helps you see a correlation.