Summary
First time home buyers may help to put a bottom into the market but they cannot do it alone. First time home buyers may help stabilize the market long enough for confidence to improve and step up buyers to move into the market. However, the market cannot recover until banks get rid of the their inventory. We have more rough times ahead.
Analysis
The fact that there are more buyers in the market is a good thing for the market even if they are just bargain hunters and first time buyers. Perhaps the first time home buyers will put a bottom in the market until the tax incentives go away. This may be enough time to allow confidence to improve and move up buyers will step in.
Right now most prospective buyers think they want to buy a foreclosure until the find that there is actual work involved then they change their mind and want to buy a fixed up home at foreclosure prices. This further drives down the prices as homeowners want to get near move in ready homes for current foreclosure prices and investors need to pay less for the homes to make the spread. Most sellers will not mark down the price quickly to the new required price but banks will. The bottom cannot come until he banks get rid of their inventory and we revert back to a traditional willing seller/buyer situation.
