First-time Home Buyers Scared Off?
Home prices have fallen to 2002 levels and mortgage rates are at record lows — so why are the number of first-time home buyers decreasing instead of increasing?
First-time home buyers used to account for about half of all housing sales, but over the past year, they’ve made up only about a third of buyers, according to a recent New York Times article.
“The obstacles facing first-time buyers are big, and it’s changing the way they look at home ownership,” Dan McCue, research manager at Harvard University’s Joint Center for Housing Studies, told The New York Times.
Higher downpayment requirements, job insecurity, and tougher credit standards may all be holding back first-time home buyers — which tend to be dominated by young professionals. The median down payment for a single-family home in 2002 was 4 percent in nine major metro areas, but now stands at 22 percent, according to Zillow.com.
What’s more, while mortgage rates are hovering at record lows, fewer buyers are able to qualify. About one-third of households have credit scores that aren’t good enough to qualify for a mortgage. The median required credit score from FICO Inc. has increased from 720 in 2007 to 760 currently, according to The New York Times article.
Source: “Home Market Being Held Back by Wary First-Timers,” The New York Times (Nov. 30, 2011)
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First-Time Home Buyers, Sellers Optimistic
More than 48 percent of first-time buyers expect home prices to increase by this time next year, according to a survey by Century 21 Real Estate.
The survey posed questions to people who had bought or sold a home in the last year.
Sixty percent of first-time home buyers say they didn’t understand the process of buying a home, and more than 85 percent of both first-time buyers and sellers said that using a real estate professional was important.
The top three skills valued in a real estate professional by both buyers and sellers were knowledge of the area, trustworthiness, and responsiveness.
More than 80 percent of buyers believe now is a good time to buy a home. First-time home buyers rated these three factors as the most influential in their decision:
• Current housing prices: 66 percent
• Home Buyer tax credit: 63 percent
• Low loan rates: 60 percent
In choosing a home, 95 percent of first-time home buyers thought price was the most important consideration, but 90 percent were also very concerned about neighborhood safety.
About 54 percent of first-time sellers think home prices are more affordable now than they were this time last year, and 50 percent were selling because they were purchasing a property they saw as more attractive and better suited to their needs.
Source: Century 21 Real Estate LLC (04/21/2010)
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Where’s the Refund?
First-time home buyers who bought as long ago as last winter are still waiting for their $8,000 tax refund.
As of mid-September, more than 1.4 million taxpayers had requested the credit by amending their federal tax returns. The IRS announced in October that it expects 5.1 million claims by year-end. That count doesn’t reflect the extension and expansion of the credit in November.
IRS spokeswoman Carrie Resch says the agency is experiencing a higher-than normal number of amended returns and because amended returns are reviewed by hand, the process is delayed.
U.S. Sen. Amy Klobuchar (D-Minn.) has been fielding constituent calls for weeks from irate home buyers. She sent a letter to the IRS that said in part: “The full and immediate economic impact of the tax credit is lost when it takes up to four months for people to get the money due to them … such lengthy delays are unacceptable and erode the public’s trust in the competence of the government.”
Source: Minneapolis-St. Paul Star Tribune, Kara McGuire (12/10/2009)
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The homebuyer tax credit
The homebuyer tax credit extension and expansion has passed the House by a vote of 403-12 after passing the Senate last night 98-0.
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7 Tips for First-Time Home Buyers
A year after the financial collapse of 2008, the housing market is very different than it was before the foreclosure crisis.
Here are seven bits of wisdom from economists and financial planners for anyone contemplating a home purchase today:
* Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
* Don’t become overconfident about income growth. Even though buyers in their 20s and 30s will likely see their incomes grow more quickly than previous generations, it is important to act sensibly when borrowing.
* Anyone contemplating adding children to the family should calculate whether they could live on one income because having both halves of a couple work may turn out to be impractical.
* Include a maintenance budget. Even new homes need upkeep and repairs.
* Buyers who can’t afford their dream home now should opt for a starter home where they can save money each month for what they really want.
* Consider a property that can be expanded and improved down the road when money is available.
* No two buyers are the same, but they should all feel confident with the loan they enter into, no matter the size of the mortgage.
Source: The New York Times, Ron Lieber
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Survey: Households Say Now Good Time to Buy.
More than three-quarters (78 percent) of potential first-time home buyers say that now is a good time to buy a home, despite widespread concern about the economy.
Out of the 1,000 prospective U.S. first-time home buyers surveyed in early March for the CENTURY 21 First-Time Home Buyer Survey, 68 percent think now is a better time to buy than six months ago.
Prices are the driving motivation for potential first-time home buyers with more than eight of ten first-time home buyers (85 percent) saying they consider current home prices affordable and 73 percent citing that taking advantage of current prices is a major factor in their decision to buy.
Interestingly, potential first-time buyers are still split between “being willing to consider an offer now” (42 percent) and “waiting for prices to go down before they seriously consider making a purchase” (48 percent).
“Current pricing, rates and incentives, such as the First Time Homebuyer Tax Credit, provide tremendous opportunities for first-time home buyers to get into the market,” said Tom Kunz, Century 21 Real Estate president and CEO. “Our research shows that while consumers still have concerns about the future of the economy, many are actively considering their options as we move into the spring selling season.”
Among the survey’s other key findings:
* Bargains in the marketplace are providing additional options for buyers to consider. 56 percent of potential first-time home buyers are considering purchasing a foreclosed or short sale home, and 63 percent are open to purchasing either a “fixer-upper” or “as-is” home.
* When asked to rate the features that they look for when choosing a home, price is the primary consideration with 87 percent saying this feature is “very important,” followed closely by neighborhood safety (80 percent) and the condition of the home (71 percent).
* Having enough money for a down payment is a top concern of potential first-time home buyers as nearly half (46 percent) said they are “very worried” about the issue.
* Most respondents (86 percent) are in the market for single family homes.
Source: Century 21
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First-time homebuyers now have $8K tax credit available to them!
First-time home buyers who purchase a home this year need to be made aware of a $8,000 tax credit available to them in the recently approved stimulus package, Nick Kremydas, CEO of the South Carolina Association of Realtors, said Tuesday.
Kremydas addressed local Realtors during the Aiken Board of Realtors luncheon at Houndslake.
“We’ve got to get the word out to the public that this credit is available,” he said. “If it moves just one buyer in your business in the next couple of months, then it’s worth it.”
Kremydas said the credit does not have to be repaid. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit, according to information provided by the National Association of Home Builders. More Details.
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