First Time Home Buyer

Can the financial news get any more depressing? We are being reminded constantly by the media of who bad the economy is and you may be feeling that now would be a bad time to consider buying that first home. Gas prices are near record highs and inflation continues to increase faster than our incomes and the jobs are going by the wayside every day not to mention that real estate is being pounded by adjustable rate mortgages that are beginning to reset and result in higher payments and an increase in foreclosures. With all of these things is it really a good time to buy a house? The answer is absolutely!

It is true, many will tell you that the outlook to buy a new home is grim at best and reports say that existing home sales will decrease nearly 7% this year. Additionally new home sales are decreasing about 3 times that and it is getting so desperate that some developers are offering unique and extravagant deals on homes including two for one deals. Still, if you have available funds to secure the financing this is a great time to take advantage of all the incentives and buy that first home. The housing crisis is more of a problem for the individual who needs to sell an existing home before being able to buy a new home; for the first time home buyer they avoid that and can just buy.

No funds right this minute? That is probably OK because the housing problems is expected to continue for the next 2 - 3 years and therefore you have time to prepare. There is currently and is expected to continue to be a significantly higher number of available homes than qualifying buyers. This means that the first time home buyer who has good credit and a down payment can benefit with a large choice of homes that are selling for great prices; a market view that is called the buyers market.

Buyer’s Market

A large number of homes for sale, fewer people buying homes, home prices dropping continuously and interest rates not out of control yet; these are just a few incentives to buy now. Throw into the mix the deals and incentives the developers, builders and real estate agents are adding to the mix to try to move the homes and move new owners in and the tax credit from the government and how can you not buy now? Still not sure if you are ready? Ask yourself a few questions: Is your credit score in good shape or can you easily raise your score? Do you have assets that you can liquidate to get a down payment? Do you qualify for the incentives? If you answered yes to these questions you could be moving into your dream house this year. Additionally, with the buyer’s market you are almost guaranteed to be able to buy more house than in years past. So stop holding out…buy now!

All through the later part of 2007 and the first part of 2008 consumer confidence began falling. The good news is that currently the reports of consumer confidence falling has ceased. The bad news is the falling home prices have not ceased. Today there were two separate reports released that were rather conflicting. One reports that economists point to an encouraging stabilization in consumer attitudes and the other reported on a continued erosion of the value of homes. This poses two entirely different views and understandings of the economy today creating unpredictable effects in the housing market. Standard & Poor’s/Case Shiller’s monthly report states that the median price of a home fell a whopping 15.8 percent in 20 of the biggest metropolitan areas in May. This is right on the heels of a nearly equally steep drop in the prior month. Also reported by the National Association of Realtors; existing home sales for June declined 2.6 percent in May and 15.5 percent since June of 2007. Despite these reports, we are led to believe that consumer confidence is stabilizing.

In all of the 20 metropolitan areas that were surveyed, home prices were down in the month of May. Not surprisingly, the falling home prices match an increase in the nations foreclosure activity adding the over abundance of housing that is not moving on the market. This is making the prices of the homes go down. This would be great for those looking to buy homes; particularly first time home buyers, if the economy were not in a state that prevents people from purchasing new homes. Fortunate for some first time buyers, there are programs that are being created and others that are still in place to assist them in buying first homes. The first time home buyers may be the only ones celebrating, homeowners who must sell a home before purchasing a new home are not as happy.

Ordinarily home prices going down are celebrated by people wishing to purchase a home; right now it is still spelling trouble for the economy as a whole. The decline of home value means a decline in equity. Homeowners who purchased their home recently might now find themselves ‘underwater’, or owing more on the home than what the house is worth.

Over the last ten years the United States experienced a real estate boom where consumers could tap into the equity in their homes to pay for home improvements, education and other large dollar items which all served to fuel the consumer economy. Today with equity falling these loans are not being taken out and the fuel to the economy has lost its spark. But, by report consumer confidence has held for this month but according to the conference Board it raised less than a point in July. Never-the-less this slight raise was the first increase since December.