They`re not on the endangered species list yet, but the first-time homebuyer is seeing the national spotlight beginning to illuminate the burgeoning population and blossoming pocketbooks of the baby-boomer move-up buyer.
The increasing attention being paid the second- or third-time buyer was evident at the recent National Association of Home Builders convention, where many of the programs focused on the bigger houses and high-end amenities that builders will have to offer to compete in the move-up market.
That trend has at least one Chicago real estate executive raising an alarm and sounding a call to arms on behalf of the first-time buyer.
”Things aren`t getting any better in terms of the overall affordability of housing. Sure, today housing is more affordable than six months ago or even a year or two ago. But that is not the long-term trend,” said Herbert Emmerman, president of Equity Realty, Inc.
”And demographically the United States is getting older. So down the road more opportunities will exist for building housing for older people as developers find they can make more profit there.
”The first-time homebuyer could again end up neglected and we could end up again with a whole generation who would be renters like before World War II,” he said. ”It`s not improbable that the mentality of my generation, that it is a God-given right to own your own home, will reverse if we don`t take a long-term approach to first-time buyers.”
Emmerman has proposed the creation of a national blue-ribbon panel to keep th needs of first-time homebuyers in the mind of the nation`s housing providers.
Emmerman envisions a 10- to 12-person committee, headed by a nationally known figure who could command media attention, that would through a series of meetings develop a national strategy to meet the continued demands of first-time buyers. Such a strategy could then be adopted and pressed legislatively by the NAHB, Emmerman believes.
”Most builders have a here-and-now agenda. Most are small companies and they need to make sales here and now. So they will address the things that appear most threatening at the moment,” Emmerman said. ”If interest rates are high they will pressure the NAHB into doing something to get them down, like with bond programs. Now tax reform is in the air, so the pressure will be on the legislative side to see that the industry is not unduly punished.
”What happens is that since the affordability crisis has eased, it gets shoved to the back burner. Of course, if interest rates shoot up it will be back to the front burner, but meanwhile we will have lost all that time.
”The answers are not going to come from the building industry or government alone. Even with financial companies, who have born the brunt of the creative alternatives to the affordablity question, as well-intentioned as they are, they are only a piece of the solution.
”So my feeling was if we could attract people from the financial community, from government and from the large and small builders of both multi- and single-family housing we could bring a lot of expertise to the table. Just having the panel doesn`t make the solutions feasible, but it does bring them into the public light.”
The prestige that such a group would command would go a long way toward keeping attention focused on the first-time homebuyer, Emmerman believes. Without such authoritative representation, Emmerman fears concerns of the first-time homebuyer may become lost in the shuffle of more pressing industry issues.
The home builders were occupied at this year`s convention with a host of political issues which left little time to address the idea of the blue-ribbon panel Emmerman is proposing. More than 70 percent of the builders polled at the convention listed the high cost of financing as the greatest issue in housing affordability, indicating why the national organization devoted so much time to deficit and interest-rate policy.
The emphasis on the national economy does have implications for first-time buyers, in the eyes of the Reagan administration, which believes the best course for the nation`s housing industry is to both encourage economic growth and reduce deficits, thus lowering interest rates.
”We want to do everything we can to see every American who wants to can own a home,” said Samuel Pierce, Secretary of the U.S. Dept. of Housing and Urban Development. ”If we get the interest rates down and get rid of red tape and regulatory mix-up, that will cause the price of homes to come down and that will benefit everyone, including low-income households.”
NAHB President John Koelemij said the organization`s board of directors did not take up Emmerman`s suggestion in Houston. But he said it was possible the idea would be discussed at a directors` meeting in March.
”There can be little doubt that housing affordability problems will limit housing opportunity for much of the decade, especially among first-time buyers,” the NAHB said in a long-range planning forecast released at the convention.
”Although high housing costs and mortgage interest rates will discourage many young renter households from purchasing first homes, many households
–particularly those headed by persons born during the first wave of the baby boom–will have the purchasing power to afford good-quality housing.”
The first-time buyer is a bigger concern in the Chicago area than nationwide because municipalities in most parts of the country have changed zoning and density laws to allow the more concentrated designs that first-time buyers find appealing and affordable.
”The average person at the convention from Chicago is down here primarily to continue the quest for affordable housing,” said James Nathenson, president of the Home Builders Association of Greater Chicago.
”We`re spending a lot of time on regulatory reform, where a great percentage of the country has already accepted it. That`s why you don`t see a lot of talk this year about first-time buyers and affordability. Chicago has to catch up.”
Young homebuyers figure in another ticklish situation beginning to confront many older, inner-ring suburbs here and around the country. The inability of younger, first-time buyers to enter a community`s housing market makes it difficult for older homeowners to sell even if they may want to move to a condominium or smaller empty-nest property.
That, in turn, causes a rise in the average age of a commuity`s residents, making it difficult to keep schools open and attract new building. To break that cycle, some municipalities around the country are offering their own incentive programs to first-time buyers, such as municipally backed mortgage bonds. Those kinds of programs are something that ought to be studied by the proposed blue-ribbon commission, Emmerman believes.
”It is still the number one objective in young people`s lives to own a home,” said David Roberts, president of the National Association of Realtors. ”But the first-time homebuyer is so dependent on the mortgage revenue programs going on at the state or local level that we cannot afford to discontinue them. The needs of the first-time buyers will be accommodated through mechanisms like those and you`ll see a strong first-buyer market if those programs continue.”
Emmerman, 39, is president and chief executive officer of Equity Realty, Inc., a Chicago-based affiliate of Equity Financial and Management Co., which operates and markets more than $300 million in property. The firm provides an array of real estate services, including sales training, construction management, marketing preparation and project consulting.
”It`s very much a consumerist idea to make sure people are provided with the housing they need,” Emmerman said. ”Even if I`m going to build a home for a last-homebuyer I`m going to want to have a buyer for the house that that buyer will leave. That`s the move-up cycle. But the whole chain is created by the first buyer. No matter how many or how few their are, they keep it going.
