The good news is that the housing market is recovering, but the bad news is that many are not yet convinced the recovery is sustainable. N.C. State University economist Mike Walden discusses what’s causing the doubt.
“Traditionally, the housing market cannot keep going, and by going I mean new building occurring, prices going up, if existing owners simply trade homes — that is, if we sell our home to an existing homeowner and then we buy another existing homeowners’ house. What you really need to do to keep the process expanding is first-time buyers. We need a new people to come in and … buy their first house. And usually in traditional times, first-time buyers account for … 30 to 40 percent of sales.
“The concern right now is not at that level. Right now, first-time buyers are accounting for somewhere between 20 and 30 percent of sales. So this is why some are concerned about whether this housing market has legs. I’m one of those people that that think it does have legs. I think that one of the reasons why we don’t have as many first-time buyers as we used to is that first-time buyers … have been scared of what happened in the housing market — prices down, the house not being a good investment.
“Now that housing prices have turned around and are going up, and I think the notion that homes, like they traditionally were, were a good investment, I think we are going to see those first-time buyers increasingly come into the market. That’s why I think that this housing market does have legs.”