What do the recent changes in the real estate market mean for first-time home buyers?
June 20th, 2010 by
I’m talking about the increase in foreclosures and the decline of home prices.
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Yes it does. This means you have more time to really find something you like and that you can afford. No need to rush or compete with multiple offers anymore. Best of luck.
No, a buyers market is created by more supply and less demand. Foreclosures do not affect it. Decline of home prices are a result of the buyers market because with all the inventory out there to buy, it is more competitive and if a seller is motivated they will drop their price.
Home values are determined by recent sales in the last 6 months respectively. So, if you have a bunch of motivated seller’s selling for much less then homes have sold for in the past five years you will see softening prices.
So how will all the recent trends affect you as a first time buyer? You have the opportunity to buy real estate at a discount price and there are plenty of listings to choose from. However, the mortgage industry has tightened up on the types of loans they extend. You may not have as many options for 100% financing that you once did. Not to say that you would buy under that circumstance, I just wanted to note that as it is popular with first time buyers. Get pre-approved first to see what you can afford, then go out and look at some homes, a lot of homes.
I will address your excellent question in two pieces:
#1 – The cooling off of the real estate market are allowing buyers a broader slelection and less pressure to buy something they are interested in. A few years (a few months?) ago, houses were selling fast, and buyers felt compelled to buy quickly. The decline in home prices are making properties more affordable for people that may have stayed in the renting market, but are allowing well qualified buyers a chance to shop for houses and find something that really suits them.
#2 – The increase in foreclosures does add more houses to the market, but because of the requirements and challenges to purchase these homes, they are more attractive to investors and not to owner occupied homes. That being said, with the number of foreclosures, mortgage companies are tightening their requirements, putting some less qualified buyers out of the purchasing market. However, there are many great first time home buyer programs available to those that are qualified, even with low or no money down.
It is a buyers market right now, enjoy it! I hope you find a great home.