First-Time Buyers Drop Off as Tax Credits Expired…

According to results from the C.A.R. 2011 Annual Housing Market Survey, the share of first-time buyers declined from 44 percent in 2010 to 34 percent in 2011, and fell for the second straight year. The proportion of first-time buyers was the lowest in the last four years, and it was the first time since 2008 that the share dropped below the long-run average of about 39 percent.
Demand for entry-level homes dropped significantly so far this year after the federal and the state tax credits expired in the second half of 2010. Tax credits were a big factor in many first-time buyers’ decision to purchase a home in the last two years, as seven in 10 surveyed* said the federal tax credit was either “very important” or “most important” in their home buying decision. Results from the Annual Housing Market Survey also support this finding as seven percent of all first-time buyers bought their homes primarily because of tax advantages in 2009 and 2010, however less than one percent in 2011 claimed that to be their primarily reason for purchasing a home.
   
        (*C.A.R.’s 2009 First-Time Home Buyers Tax Credit Survey)