I am happy to report that first-time home buyers are and will play a larger role in the housing market in 2013. They will also be experiencing big changes!
A report by the National Association of Realtors states this group of buyers were involved in 39% of home sales through June 2012. The current group of first time home buyers are now finding less inventory to to choose from and steeper competition for those homes. Available home inventories are at record lows. First-time home buyers are finding that investment buyers are their major competition for the same homes.
To remain competive first time home buyers will need to broaden their search and be more flexible as well as understand they may need to compromise. First time home buyers (all home buyers) should have their financing process started and be sure that it can be completed quickly once they identify a home to purchase.
For nearly 2 years, FHA mortgage financing was the most utilized loan product for first time home buyers. FHA loans offer 3.5% down payments and can have specific restrictions thus some sellers prefer buyers with cash or using conventional loan products. Typical investors are paying cash and winning title transfer which include less fees for the seller to pay from their sale proceeds.
My advice to first-time buyers.......be able to act fast and be able to have their financing processed quickly. Some lenders are taking 9-12 weeks to complete a real estate transaction. Some sellers can't or won't wait that long. Housing experts are suggesting first-time buyers should look into working with a community bank or local mortgage broker, consider a pre-approved conventional loan (5% minimum down payment) over an FHA mortgage loan, have all financial documentation available at time of formal loan application, stop using credit cards and don't change jobs prior to title transfer.
Yes, Marianne, you can purchase a home but need to know the process before making the decision!
Keller Williams Greater Cleveland, Carol Murphy Team
"First-time Home Buyers May Have to Compromise" Sun Sentinel (1/10/13)
Realtor Magazine, Realtor.org