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Why You Love First-Time HomeBuyers

Stocks in this article: CLGX

This doesn't mean conditions are great for today's would-be first-time buyers. Many are having trouble getting a mortgage because lenders have become very conservative. And several analyses have found that first-time buyers are having trouble competing for homes with investors.

Of course, from a seller's perspective, it doesn't matter whether the buyer is a first-timer or an investor. Investors are scarfing up inexpensive homes because they appeal to renters, who are the future's first-time buyers. Any kind of demand is good from the seller's point of view.

All this suggests that a modestly priced home is a safer investment than an expensive one, because there will be a better chance of finding a buyer if times get tough.

Aside from modest price, what makes a home appealing to a first-time buyer?

Good condition matters. Many first-time buyers are used to having the landlord take care of things and don't have the skills or interest in a lot of do-it-yourself projects. A seller trying to appeal to these buyers might consider offering a warranty.

Easy resale potential can be important, too. Young homebuyers who are early in their careers want to know they won't be trapped in the home when the next job change comes along. That means that even a buyer without children may want good public schools, which make a home more appealing. Convenience to the job market is important too, and that often means being in easy commuting range of a city.

Young buyers may be more inclined than older ones to focus on nightlife and abundant outdoor activities. A staid suburb might appeal to the homeowner who has kids or plans to soon, but it can look pretty dull to the potential buyer who is not yet at this stage. Most homebuyers like to be surrounded by people similar to themselves -- young singles and childless couples, or families.

As the housing market gets stronger, all types of homes will sell, but the home that will appeal to the first-time buyer could well be a safer bet. Though a nationwide collapse in home prices is rare, it's not at all uncommon for local markets to run into trouble.

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