The sub-prime mortgage collapse has taken a larger toll on the real estate market than one would think. It is common for people to think that the foreclosure crunch is limited to the middle and upper level of people who knowingly or unknowingly overextended themselves in buying a home. In fact, more troubling to the market was the number of first-time home buyers who bought with little money down and whose credit was not top-level - a common occurrence with sub-prime mortgages. Why?

In most real estate markets, first-time home buyers truly move the market. Some commentators have gone so far as to say that for every home first-time home buyers buy, five more are sold. I'm not easily persuaded that as many as five more sales may be attributed to a single first-time home buyer. However, it's clear that if they sit out the market, the market will suffer. That multiplier principle - whether a factor or four or five - can have incredible market repercussions.

For example, in the central part of New Jersey, a first-time home buyer might buy a $300,000 condo or townhome. That would allow the condo/townhome owner to trade up about 50% - to a home selling for $450,000. That seller in turn would probably buy a home around $625,000, and that seller might buy for $900,000.

So what is keeping those first-time buyers on the sidelines? The mortgage crisis, most likely. A year or two ago credit-worthiness was less an issue than it is today. 103% financing made it possible for buyers without much cash to buyer a home - and many did, moving the real estate market along. When sub-prime mortgages dried up a few months ago, many of the first-time home buyers fell by the wayside.

That picture is changing, as lawmakers figure out (finally) that something must be done to make mortgage money available to those who have good jobs, pretty good credit, and little cash. The surviving banks and mortgage companies are coming up with new plans as well. After all, banks and mortgage companies exist to loan money, not own foreclosed properties.

The market in changing - for the better. As the first-time home buyers are pulled back into the game after languishing on the sidelines, homes will start selling again. The "pig in the python" of foreclosures will be digested eventually. Watch carefully as lower-priced properties start to sell in higher numbers. And, if you're a first-time home buyer, time to get back in the game before prices start rising under the pressure of more buyers buying.