That shrinking foreclosure inventory is good news for most area homeowners because it means prices will begin to rebound, giving borrowers more equity in their homes and thus a higher net worth.
But what about first-time buyers now scouring the market?
A new study shows an overwhelming number of first-time buyers are mainly interested in distressed properties, or foreclosures and short sales that typically carry a large discount.
Despite the horror stories of drawn-out closings, offer refusals and unsettling inspecting results, many first-time homeowners are willing to navigate the cumbersome process to reap the discount, which stood at an average of more than 30 percent in Manatee in January, according to a first-time buyer survey of agents and brokers by Realtor.com.
In fact, 91 percent of first-time home buyers were interested in a distressed property in 2011, and the study expects similar results this year. Of those, 89 percent said they would choose a distressed home because they believed it was a good value, 30 percent cited the property's location as a draw, and 26 percent saw an investment opportunity.
So, the question remains, could too steep of a drop in foreclosure inventory actually work against the economic recovery by scarring away the first-time buyers, who are typically younger, and thus damaging the quality of the area's labor force? Or will more equity for those already here help the economy more, by encouraging area borrowers to spend rather than save?
This study was particularly interesting to me, aside from the fact that I'm a business writer, because my wife and I are in the final stages of the buying process with a short-sale now. It's our first home, and we have been waiting on the bank to finalize our offer since October (that's six months). While we ultimately will get a great deal, I probably would not ever buy a short sale again. It's too much hassle.
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