First-time buyers are struggling the most at this point – higher prices always take a higher toll on those just starting out.
Here’s a quote from the Bloomberg piece that gets to the heart of the matter:
“The big housing rally wiped itself out because prices increased too quickly for buyers to keep up,” said Richard Hastings, a consumer strategist at Global Hunter Securities LLC in Charlotte, North Carolina, who predicted the slowdown eight months ago. “The pool of eligible new buyers is collapsing” because of stagnant incomes and lack of credit, he said.
This is no quick market squall, over in a few months, but rather a more momentous market shift.
In fact, home sales and mortgage activity will continue to falter right into 2015. Here’s what the MBA’s forecast says:
The weakness continues to be concentrate in the first-time homebuyer segment of the market, although the entire conforming portion of the market is contracting at this point.