My New Blog

This week I want to pose the question: Are there a lot of people who want to buy their first home, but don't think it's possible?

In the St. George area prices were so high during the recent real estate boom, that truth was, most entry level home buyers could not afford to purchase their first home.  We all know about the 38% run-up in home prices in 2006; one of the highest appreciations in the nation during that time period.  Well times have changed! 

We are seeing a good number of properties in the sub $120K range for the first time in a long while.  I checked the WCBR MLS and discovered that 385 properties have sold in the last 12 months between $120,000 and $199,000.  Granted, some of those buyers were probably investors, but I am convinced that a goodly number of them were FTHB's.

Here in Utah we have the Utah Housing Corp. that funds loans up to 103% LTV.  That means that they will lend you the full purchase price amount plus 3% more to cover closing costs.  Basically it means no out-of-pocket money for qualified buyers.  Currently a family of 3 can earn up to $66,000 and qualify for this money.  You must have a FICO score of 660 or better to qualify. 

So my question is:  Are the first time buyers not buying because they don't know they can, or do they think they can outguess the market and wait for a bottom in home prices before they buy?  Home interest rates have crept up in the last 60 days.  Just a 1% increase in rates makes it much harder to qualify for the same priced home.  We are rarely successful in pinpointing a bottom in markets during the cycle.  Usually we don't even know a bottom occurred until six months after it happened. (See Real Estate Cycle on my website)

Another factor in being able to buy a home, are the new rules for qualifying.  Since the "Credit Crunch" began with all the sub-prime loan debacle, we have begun to see almost an "over reaction" amongst lenders in the rules they are putting in place.  The question then becomes, "If you can qualify for a loan today under today's guidelines, will you be able to qualify in 6 months or a year?

I believe that fence sitters need to jump off and jump in now!  Even if prices dropped a little more, you shouldn't chance that you can get into that first property later.  The best time to buy a home is when you are able to.  You can't begin to increase equity in a home unless you own one!

I welcome other points of view, and hope some of you will use this blog to post your thoughts on this or other related topics.

Best wishes,
Alan