Last year, the federal government gave first-time homebuyers a well-needed assist in the form of the 2009 First-Time Home Buyer Tax Credit. And, like shoppers during the “Cash for Clunkers” program, many consumers jumped off the sidelines to grab some “free money” and purchase their first home.

When the credit expired and the holidays approached, home purchases slowed down. First-timers again have been emerging in response to an extension of the tax credit. Most are driven by traditional first-time buyer values—fulfilling the American dream of homeownership; looking for a place to start a family; building equity instead of paying rent; and gaining independence from mom and dad.

However, market circumstances have changed dramatically from just three to five years ago. While most buyers know they can now get more home for their money, what many don’t realize is that they will very likely encounter new hurdles before they reach the closing table.

So will the wave of first-time buyers continue after the expiration of the tax credit later this spring? It’s still going to be a buyers’ market after the tax credit expires. Granted, an improving economy is also essential, and lingering concerns over employment will continue to hold some back from taking the plunge into
homeownership. Interest rates are still at all-time lows, and price declines have greatly improved affordability in many markets. Buyers are still in a position to benefit from purchasing a home, even without the tax credit.

First-time Buyers, By the Numbers
Average Age: 30
Medium Income $61,600
Average Purchase Price $156,000 (down from $165,000 in 2008)
Financed through FHA: 55%
Used a Fixed-rate Mortgage 96%

Source: National Association of Realtors