Housing Crisis Puts Off First-Time Homebuyers. Falling Prices Affecting Arizona!
BOSTON (Reuters) - For decades, buying a home was a key step on the path to financial security for the American middle class.
Home owners could count on a fixed mortgage payment rather than rising rent, take advantage of tax breaks, and build equity as their houses increased in value over time. But with home prices falling and families losing their homes to foreclosure, some people who under other circumstances would be looking to buy their first home now see greater security in renting.
One such person is Lisa Chesnut, who lives in Tucson, Arizona, and works as an information systems coordinator. With a good job and two young sons, 29-year-old Chesnut and her husband, Bryan, look like classic first-time buyers.
They had considered it, until the market started to slide a year ago. "At first we thought, prices are falling, that's good," she said in a phone interview. "Then we started reading about the foreclosures and the ARM rates and people losing their homes," she said. "We thought, what if something happened where we could lose our house?"
Her big fear is falling behind on a mortgage. Having read about people who face higher payments on their adjustable-rate mortgages (ARM), she realizes that being approved for a loan does not guarantee it will be affordable.
STAYING PUT
One sign that more people are choosing to remain in rental apartments while they wait out the slump comes from Equity Residential, one of the largest U.S. apartment owners. Fewer people have been moving out of its apartments -- last year 63.3 percent of its units changed hands, down from 64.9 percent in 2006.
"Turnover is slowing and the rate of moving out for home purchase we also saw slow throughout 2007," said Fred Tuomi, president of property management at the Chicago-based company, who oversees about 150,000 apartments nationwide.
And population projections by the National Association of Realtors suggest hundreds of thousands of young Americans are sitting out the housing market entirely -- neither buying nor renting.
"There's probably 700,000, maybe 800,000 people out there that are not getting into the market either as a renter or as a home buyer," said Walter Molony, spokesman for the NAR. "Where are these folks? They're out there, they've got jobs. Some of them are moving back with their parents, never left the house, they're doubling up with roommates."
There's no scarcity of data to worry potential home buyers. Recent reports show that the average price of an existing single-family home in U.S. metropolitan areas fell 6 percent in the fourth quarter, while foreclosure rates in the top 100 metropolitan areas soared 78 percent last year.
"They're the most nervous people I've ever met in my life," said Bob Moulton, president of Americana Mortgage Group, referring to the potential first-time buyers he speaks with. "They've seen what can go wrong in the mortgage market," said Moulton, whose company brokers $300 million of mortgages a year, mainly in suburban New York. "Everybody's advising them, from the mother, to the father, to the uncle, their co-workers, telling them, 'Don't buy. Prices are coming down."'
OWNERSHIP DOWN
Indeed, home ownership rates have fallen to 67.8 percent of households at the end of last year from 69.2 percent in 2004. That is below a 69.8 percent rate in Britain, but still much higher than European countries such as France and Germany.
For young people who are unsure about whether to buy instead of renting, experts said the key thing to consider is how long one plans to live in a house.
During the boom years, from the late 90s through the first half of this decade, rapidly rising house prices meant that in many parts of the country a buyer could turn an easy profit after owning a house for just a year or two.
Now young buyers should plan to stay in their homes longer than that, said Jim Gaines, a research economist at the Real Estate Center of Texas A&M University, in College Station, Texas. Even his own son, who recently married, has come to him with fears about buying real estate.
"I told my son this, 'Look, if you buy a home today, you better be prepared to stay in it for a minimum of five years. Don't worry if it goes up or goes down (in value) a little bit in the next six months,"' Gaines said.
That knowledge is another factor keeping some young Americans in their rental apartments.
"A lot of people I know are in that position, where their home isn't going to sell for what they paid for it right now," said Josh Stenger, a 37-year-old professor of film studies who lives in a rental apartment in Pawtucket, Rhode Island.
Stenger said he has toyed with buying a house or condominium, but has held off until he was sure he would be staying put for several years.
"I don't foresee buying anything without planning to stay in it at least five years," Stenger said. "If the economy was different and it looked like prices were going to start going up again, I might feel more pressure."
(Reporting by Scott Malone; Editing by Eddie Evans)
Copyright 2008 Reuters News Service.
Why Let The Stress And Pressures Of Today's Turbulent Housing Market Determine When You Can Or Cannot Sell Your House? Gain Peace Of Mind And Contact http://www.sellquickforcash.com/ Today. Our House Buying Specialists Are Waiting To Create A Custom Solution To Your Housing Problem!
602-626-3598
Labels: cash for houses, cash offer, fast cash for you house, Paying Cash For Houses, sell my house fast, sell my house quick, sell quick for cash
posted by SellQuickForCash @ 9:54 AM
0 Comments
