PARAMOUNT MORTGAGE - LENDER'S BLOG

The National Association of Home Builders (NAHB) released a research study last month that revealed a growing trend of first-time home buyers to purchase smaller, less expensive homes.

Forty one percent of the 8.4 million households who bought a home between 2007 and 2009 were first-time buyers.

These buyers represent a significant portion of the market and "builders are increasingly gearing their homes to the needs of first-time buyers," said Bob Jones, Chairman of NAHB and a home builder from Bloomfield Hills, Mich.

This trend will only accelerate as the economy improves and "more people in their 20s form households," continued Jones.

An experienced builder, Jones said "new homes are a better match for the needs of the population in general."

According to Jones, when "compared to what is typically available in the existing housing stock, [these new homes] are more energy-efficient, easier to maintain and have designs better suited to today's lifestyles."

First-time home buyers for the two years of the study had an average age of 34, compared to an average age of 46 for those trading up.

The average income of first-timers was over $67,000, about 30 percent below the average household income of trade-up buyers at $97,000. About half of the first-time buyers earned less than $60,000.

The household size of both first-time and trade-up buyers has been declining, while single-person households have been on the rise.

First-time buyers bought homes averaging 1,874 square feet, significantly below the 2,549-square-foot home purchased on average by those trading up.

Forty-six percent of first-timers bought homes smaller than 1,500 square feet.

The large majority of first-time buyers - 82 percent - purchased single-family detached homes.

Thirty eight percent of first timers in the NAHB study considered price to be the deciding factor in their decision to buy. Home design and layout came in second at 36 percent.

On average, first-time home buyers looked at 15 homes before making their purchase. Sixty three percent used their savings for the down payment and 22 percent of them had no down payment.