The much awaited return of first time home buyers in May gave the market a much needed dose of optimism that hasn’t been seen in years. The one area that has been holding the market back was a lack of first time home buyers. If this trend continues it could be a sign that a stable healthy market is on the horizon.
There were 5.35 million existing home sales nationally in May 2015, up 9.2 percent from the same period last year, according to the National Association of Realtors® (NAR). This is the eighth consecutive month of year-over-year sales increases. “Solid sales gains were seen throughout the country in May as more homeowners listed their home for sale and therefore provided greater choices for buyers,” said NAR chief economist Lawrence Yun. Existing home sales include single family homes, townhouses and condos and co-op units.
The Midwest region, which includes the Chicago Metropolitan Area, also reported similar stellar gains. Existing home sales were reportedly up 4.1 percent in May to 1.27 million, a 12.4 percent year-over-year increase.
The increase in resale activity around the country is partly attributed to first-time buyers re-entering the market, due to common sense reform of tight mortgage restrictions and lower mortgage interest rates, are now finally able to obtain an affordable mortgage and purchase a home. “The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs,” noted Yun.
Originally planned for implementation in August, the Consumer Financial Protection Bureau (CFPB) has proposed delaying the revised Truth in Lending and Real Estate Disclosures, also known as the Know Before You Owe rule, to avoid any possible disruption or delays in closing during the busy summer season. If the CFPB delays the implementation, the new regulations will take affect on October 3, 2015. The changes are being made to make it easier for homeowners to understand the terms of their mortgage in plain English. It also requires lenders to provide mortgage information to borrowers within a specified timeframe in an effort to avoid surprises at closing.
With the busy summer home buying season picking up steam and first-time home buyers now better able to obtain a qualified mortgage, they will need the assistance of real estate agents and brokers to help them find homes, especially in markets like Chicago where tight inventory is pushing up home prices.