Housing prices are still reasonably low…
So Where are all the First Time Homebuyers?
A new real estate trend is on the rise, despite all the news that the housing market is slowly recovering. It’s the decline of the first time home buyer. According to a recent survey, first time homebuyers represent 34.7 of housing purchases. This number is down from 37.1% in early summer. (Campbell/Inside Mortgage Finance HousingPulseTracking Survey) And the National Association of Realtors is quoting an even more grim 34% for that same summer, down from its usual 40%. With upcoming changes to morgage insurance from FHA, it’s likely that this number may fall even further. So when the media is celebrating a housing market that is slowly on the mend, why are first time homebuyers not sharing in this success?
Easy Loans Are a Thing of The Past
Lender underwriting guidelines have become much stricter in the wake of the financial calamity that was our housing market. Fewer large banks are willing to take a chance to lend to to anyone who isn’t a “sure thing”. With many first time homebuyers coming to the table with very little down payment and credit that may not be pristine, it’s becoming much more difficult to find loan programs that will accommodate these purchasers. In the past, first time homebuyers have relied heavily on loan programs from FHA, but even this is likely to change. Recent announcements that FHA mortgage insurance policies are likely to increase in early 2013 will make these once dependable programs much less affordable for those who need them the most.
Market Conditions ARE GREAT… for the right Buyers
The percentage of move-up buyers and investors is growing. And our current supply of available property is currently declining. This creates a situation that makes purchasing for a first time homebuyer much more challenging. With buyers competing for properties, especially in higher demand areas, first time homebuyers must be prepared. Move-up purchasers and investors traditionally have access to larger down payments, or even cash, for their home purchase. Sellers LOVE these buyers as they customarily close on time with few delays. With often times multiple offers for sellers to choose from, first time homebuyers coming to the table with FHA financing may find themselves in a bind. It’s not hopeless! A winning combo of getting a preapproval with a communicative lender and working with a persistent real estate agent could still help first time homebuyers take advantage of our current market.
What to do… Get Off the Fence!
Mortgage insurance rates appear to be going up very soon. If buying your first home is on your list of things to do, make it a priority & soon. Loan programs are changing daily, home prices are slowly on the rise and unfortunately it appears to be getting more expensive for first time homebuyers to get into their first home. Take advantage of the loan programs that are currently in place. Take advantage of the fact that many investors and move-up buyers tend to stop looking during the holidays (which decreases the competition that you’re up against). It’s time to take yourself off the endangered species list, and give yourself the present you’ve been waiting for… a Home for the Holidays!
(percentages/data courtesy of 🙂