The Florida Association of Realtors is touting a surge in first-time home buyers to explain fairly decent sales number in April.

 But interestingly, Home Encounter LLC, a Tampa real estate company, thinks the first-time home buyer explanation is shaky in the Tampa Bay area. It came to that conclusion by studying buyers' method of financing:

Home sales hit a 22-month high in April, according to the Florida Association of Realtors. The jump in sales has been widely attributed to first time buyers who are being lured into the market by historically-low prices.

But there’s no evidence that first time buying is actually on the rise in Tampa Bay. On the contrary, Home Encounter reports that year to date, the proportion of first time buyers is smaller than anticipated and significantly below last year’s levels. “First time home buyers comprised 43% of the market in 2008, said Home Encounter president Peter Murphy, “but our research suggests that this number is much lower year to date.”  

Home Encounter analyzed Realtor reported transactions for all sales in the tri-county area year to date. Realtors report whether a buyer pays cash or finances. If they finance, the Realtor must disclose the type of financing. Realtors reported that 41.3% of all sales year to date were purchased by cash buyers at an average price of $121,400. 33% of all sales were financed conventionally, which typically requires a 30% down payment. These two categories of transactions exclude most first home buyers, and represent 74% of all sales year to date. With the average conventionally-financed home costing $232,000, 74% of sales required at least $70,000 cash in order to buy.  

“Given that the average household income in Tampa is right around $45,000, it seems highly unlikely that first time home buyers dominated either the cash-purchase or conventionally-financed categories”, Murphy said. Out of the 15 categories of terms reported by Realtors, only three were likely to have had a majority of first time buyers – New FHA Loans, New VA Loans, and Assumed FHA/VA loans. These three categories accounted for less than 23% of all sales year to date. 

A National Association of Realtors (NAR) survey reported that first time home buyers accounted for 53% of all home purchases in the first quarter of 2009. Home Encounter doubts that holds true for Tampa Bay

So who is driving the local sales increase? “Investors and repeat buyers”, Murphy said. “It’s highly unlikely that first time buyers can afford a home that priced almost 40% above average, given that conventionally-financed homes are averaging $232,000. Nor is it typical for first time buyers to pay cash. Investors are snapping up bargains and repeat buyers who were sitting on the sideline for the last two years are finally starting to buy.” 

So why aren’t first time home buyers jumping into the market? Home Encounter research shows that 43% of all home sales in April were either "bank owned" or short sales. “Distressed homes often can’t be financed due to their condition. And homes that aren’t distressed aren’t necessarily affordable for first-time buyers,” Murphy said.

As hard as it might be to believe, prices may still be just too high.