The first-time homebuyer in 2009 will have a tricky real estate environment facing them, but negotiating the challenges ahead could prove rewarding. On the positive side, home inventories remain high, so the first-time buyer will have a wide selection of houses among which to choose. Due to the considerable competition, home sellers, whether builders, individual homeowners or banks, are either offering or being receptive to incentives of all kinds.

Mortgage rates remain low, though economic turmoil has made rates volatile and financial market uncertainty (the status of Fannie Mae and Freddie Mac for one thing) has kept them higher than they should be. Rates for 30-year fixed rate conventional mortgages had fluctuated between roughly 6% and 6 1/2% from July to late November before dropping below 6% and now in the low 5’s, where we hope to see them remain in 2009. Unfortunately, no-downpayment options are mostly gone, so buyers will need some cash. There are a couple of options left, please contact me so Ican let you know if you are eligible. Otherwise, plan to put 3.5% down minimum.

What about 2009? Until recently, we had been optimistic about prospects for the new year. But with financial markets most recent meltdown, a continuing credit crisis and a sour economic outlook throwing a scare into many Americans, let us just say that, for now, we are, well…hopeful. A number of respected market watchers have predicted that the bottom for home prices will come in 2009, as expanded efforts to slow foreclosures and jump start the housing market take hold. We now expect to see additional measures to reinvigorate the housing market early in the year that should benefit homebuyers. With luck, this should finally get things turned in the right direction.

If you plan to be a buyer in 2009, a key is to think a little longer term than you might otherwise have. First-time homebuyers rarely expect to make a lifetime commitment to their initial home, but first-time buyers in 2008 said they anticipated staying in the home for ten years, up from seven years in 2007, according to a survey by the National Association of Realtors. That sounds like a sensible adjustment of plans and expectations under the present conditions. One benefit from being ahead of a market turnaround is that you are likely to have more homes to choose from than if you wait until the upturn is clearly underway.
The supply of homes on the market nationally actually fell in August and September, after having peaked in July. These first, modest signs of a recovery were probably halted by October and November’s financial tumult, but 2009 could see a more lasting shrinkage. We understand that it is a little scary for a first-time buyer in such unsettled market conditions, but without a home to sell, they are really in the best position of anyone.

Favorable opinion has been increasing about whether this market is, for all its worries, attractive. A NAR survey found that two-thirds of Americans believed 2008 was a good time to buy a home, up 12 percent from 2007. If everything falls into place, 2009 should be even better. Making a mortgage choice in 2009 will be less complicated than in recent years. The reason: there are fewer options to be had.

While we are generally in favor of having as many choices as possible, having a lot of inappropriate choices can be dangerous. Too many homebuyers in recent years were seduced into taking mortgages that weren’t appropriate for their financial circumstances. Now, though, most lenders have returned to encouraging borrowers to take on mortgages they will be able to afford long term. One result for firsttime homebuyers is that they will be less tempted to overbuy. Once you start looking for a home, you will find that in some neighborhoods, the selection will include numerous foreclosures, while in others, coming across a foreclosure will be rare.

Many foreclosures will require some work to bring them to liveable condition, something that most firsttime buyers typically don’t want to tackle. However, those who take on that challenge will find some of the greatest bargains in the marketplace.
Patient first-time buyers are also in a good position to take advantage of short sales. A short sale takes place when the sales price of a home is below what is owed to the lender. Because the lender must approve the sale, their internal processes determine how fast offers are okayed. Some lenders are now streamlining approvals, others are still dithering. Whether you decide to include or eliminate foreclosures and short sales, the large number of properties for sale may still seem overwhelming. © 2007, Real Estate Information Services, Capitol Assets, Choice Real Estate, Inc. & Choice Finance®

In any market condition it is important to establish your priorities and stick to them, but under the present one, it is vital. That is another reason why it is critical to have an experienced Realtor to help you do so.

This entry was posted on Tuesday, December 16th, 2008 at 2:00 pm and is filed under 3) General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.