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Over the last three months, first time homebuyers have canceled new construction contracts, have canceled existing home contracts and basically no longer engaged in purchasing a home. They are MIA. It has gone from bad to worse with rates jumping so high. When are the first time homebuyers going to come back?

The real estate market is going into a substantial recession. Home prices are dropping 10, 15 & even 20% in many parts across the country and there is little incentive right now for any homebuyer to purchase a home. High home prices and high interest rates – it’s a bad combination.

When is the first time homebuyer going to reengage? Not until home prices come down to a point where it can offset the increase in interest rates. It could be awhile. For many, they have little to no money down. This makes it especially difficult because mortgage payments tend to be higher for those with minimum down payments.

As one lender noted, the only potential homebuyer right now is one that has some decent money down. Such homebuyers are few and far between. They have more flexibility to negotiate a deal and find a lower payment.

For the first time homebuyer with little down, it could be awhile until such consumers come back into the market. The housing market will really struggle until they reengage.

  

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