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Layoff Worries vs. Buyer Incentives

Worries about layoffs and their tendency to drastically interfere with one's ability to make a monthly mortgage payment don't seem to be burdening first-time buyers as much as they weigh upon existing homeowners.

About 18 percent of people who consider themselves first-time home buyers said they plan to make a purchase this year so they can take advantage of the new $8,000 tax credit, according to an early-March survey commissioned by Move Inc., the company that operates a listings Web site for the National Association of Realtors. Among all surveyed, first-timers and repeat customers alike, 5.8 percent said they planned to buy within one year; and another 13 percent said they planned to buy in the next two years.

The survey revealed a world of worry, though, among current owners. A recent job loss in the household is causing 27 percent to fear they may default on their loan. Another 29 percent worry that a job loss in the future could force them to fall behind on their mortgages. Another 26 percent worried that they might default because they owe more on their home than the homes is worth.

Many of those current homeowners, of course, are stuck with homes they bought at top dollar, often with risky loans that carry interest rates that are much more burdensome than today's low rates. While first-timers still face the uncertainties of layoffs, they're not chained in place by choices made during the boom years.

What do you think? Are these survey numbers on the mark compared with what you see in your community?

By Elizabeth Razzi  |  March 24, 2009; 6:00 AM ET
Categories:  Buying , Foreclosure , The market  
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Next: New Tax Credit, New Windows


5.8% plan to buy this year. That's on par with normal historical rates of turnover in the housing stock. (see Calculated Risk's Existing Homes Turnover) CR

So, I'd say, spring is here and normalcy may be returning. Definitely a good thing, but not necessarily the end to the price declines in neighborhoods where asking and selling prices are still off by 10% or more. Fortunately for me, list prices see to be coming down to be in line with comparable sales, and closing prices are starting to be at or above list out in Burke where I'm looking. This is good for me as a buyer because it means the market has already done the hard work of convincing the seller to accept a lower price, and I now can just submit reasonable offers.

Posted by: kingstowne_renter | March 24, 2009 9:33 AM | Report abuse

We also find it interesting that nearly three-quarters (72%) of adults reduced spending in the past year to make monthly mortgage or rent payments, mostly by cutting discretionary spending such as vacations, entertainment, and eating out.

--Jill Kipnis
Blogger, Move Trends

Posted by: jillkipnis | March 24, 2009 8:54 PM | Report abuse

I write for a couple of real estate blogs and wrote an article about the Move, Inc. study....As much as I wish it were accurate I believe their stats are seriously out of whack...if they are correct then 12 million homes will be sold in the the next year which will leave the US in a housing shortage...I have complete details as well as the facts to support this in a post I did at
Dennis Norman

Posted by: DpnStl | March 29, 2009 9:21 PM | Report abuse

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