Price Correction Opens Door for First-Time Buyers: Report

If there is one positive to come out of the nation’s historic home price correction, it’s likely to be this: many responsible would-be first-time homebuyers that had found themselves locked out of overheated local housing markets during the unsustainable run-up in home prices are now finding their way towards home ownership — or, at least, are free to begin realistically considering it. It’s the upside of a painful housing correction that I think many are missing in an all-too-often narrow-minded effort to keep over-leveraged borrowers in their homes at nearly all costs. A study released Thursday morning by Century 21 Real Estate LLC found that three quarters of potential first-time home buyers say that now is a good time to consider buying a home, despite expressing widespread concern about the economy. Out of the 1,000 prospective U.S. first-time home buyers surveyed, 68 percent think now is a better time to buy than six months ago. The largest reason for this sentiment? Falling home prices, of course. Eight of ten would-be first-time home buyers say they consider current home prices affordable, while 73 percent of actual first-time buyers cited “taking advantage of current prices” as the major factor in their decision to buy. Which means that one borrower’s painful price correction might also been seen as another (more patient) borrower’s opportunity. Interestingly, potential first-time buyers are still split between “being willing to consider an offer now” (42 percent) and “waiting for prices to go down before they seriously consider making a purchase” (48 percent). In other words, there is still plenty of warranted uncertainty over where home prices will go next over the near term — say the next 12 to 18 months. It also appears that the traditional stigma around distressed and REO property sales is waning among consumers: the study found that 56 percent of potential first-time home buyers are considering purchasing a foreclosed home or a home available via short sale, while 63 percent are open to purchasing a home “as-is” — a huge shift in the expectations of would-be first-time homebuyers, at least is consideration to attitudes regularly captured in consumer surveys during the housing boom. Perception about the lending market is a key concern for prospective first-time home buyers, as well, according to study results. Current mortgage rates are considered to be affordable by approximately three-quarters (72 percent) of respondents, and 62 percent recognize that rates are lower than a year ago. However, 75 percent of potential first-time home buyers believe it is difficult to get a home loan right now and 74 percent think it is harder to get a loan than the same time last year — which, in truth, it is. Nonetheless, it’s clear that the nation’s housing crisis is set to open the door for many first-time homebuyers — usually young families, many of whom were left behind in states like California and Florida by home prices that quickly outstripped incomes. For all of the press given overleveraged borrowers willing to take out loans they shouldn’t have, there are plenty of young families that chose to wait it out — and falling prices, along with low mortgage rates, mean that for those families, their patience and prudent financial decision-making may yet be rewarded. Write to Paul Jackson at [email protected].