First-Time Home Buyers Jolt Market Into Life

There is a surge of first-time home buyers in California and across the country who are taking the plunge into the still-shaky housing market, exchanging rents for mortgages. Lured by a combination of a drastic drop in home prices, expanded FHA-insured loans, record-low interest rates and an $8,000 federal tax credit, these newcomers are breathing new life into a beleaguered market. Their entry, many hope, will help slow the fall in home prices and sales. First-time buyers bought more than half of the existing homes sold in February, according to the National Association of Realtors®, and helped add to the 5.1% increase in sales from the month earlier. Enticed by the huge drop in prices around her neighborhood, first-time buyer Ucilia Wang says she's willing to take the chance that prices could slide further or that the economy could worsen. Overall, in Oakland, Calif., where she rents a tiny one-bedroom apartment, the median home price dropped 66% over the past year. In her sought-after neighborhood of the Piedmont District, Wang is finally finding homes in her price range of about $500,000, which would have been hard to find two years ago. "You don't have to spend $500,000 for a one-bedroom condo [anymore]. You might be able to get a single-family house for that now," says Marci Orler, a Realtor® in San Jose, Calif., who bills herself as a first-time home buyer specialist. With six active clients, Orler is much busier today than she was this time last year when few first-timers, or anyone else for that matter, were shopping for houses. Prices have finally fallen to a level that people without equity can consider buying, she says.