How Important Are First Time Home Buyers To the California Real Estate Market?

I asked my LinkedIn community how important first time home buyers were to their (local) real estate market. 

Rosemary Joles of San Diego said:

Many of the San Diego first time home buyers thought they had been priced out of the market at the top of the real estate boom. They now are beginning to realize they can fulfill the dream of home ownership again here in San Diego. 50% of my business is first time home buyers, so they are extremely important to me. In addition they are very important to the revitalization of the housing market as a whole. Especially since they make up 41% of the current market share.

I agree, Rosemary.  Two years ago, I warned of the impending collapse of the under $500,000 market in San Diego County.  Last year, I thought that market would be robust this year and that the $500,000- $1,000,000 market would suffer due to lack of available financing.  As it turns out, I was right both years.  I think we'll continue to see "bargains" in the under $500,000 market, well into 2010 and increasing value in the mid-priced homes, as its prices collapse.

Will Handley, a Los Angeles home inspector said:

First time buyers are the industries life blood. My business expands and or contracts based on the healthy in-flow of new first time buyers into the market. With employment numbers in decline, the corporate transfer client base is shrinking as well. Thank goodness for the exceptionally robust REO market.

Amen, Will.  The REO market (foreclosed homes being offered by the bank) isn't just healthy for the real estate industry, its healthy for the economy if we intend to battle back from this recession. 

John Pucciano, a REALTOR in the DC-area, remarked:

At this stage, particularly with the $8,000 stimulus credit for first time buyers, low interest rates and affordable housing, first timers make up more than 40% of my business. This appears to be more than a local market experience (see resources below). While they do require additional effort, it is very satisfying to help the first timers progress to home ownership. I have been making a concerted effort to reach out to them.

John's correct.  The $8,000 tax credit, for people who have not owned a home in the past three years, is akin to federal bribery.  Simply put, the Government is willing to give you eight grand if you'll buy a home between now and December 1.  I think the problem is that many first time home buyers either:

(a) don't know that the program expires December 1, 2009
(b) don't believe the Government will stop the program.

I can't intelligently speculate about the unpredictable actions of our Government but I do know that its prone to do whatever will garner them votes.  Unemployed, unhappy people don't vote for the party in power so take that into account.