Posted on: 26th Aug, 2010 08:00 am
There is a new research tome published last week by the Federal Reserve Bank of Philadelphia, concerning first time home buyers, that is drawing attention.
It seems that the benefits of owning a home may be lessened by some of the costs that are attributable to owning, such as declining home equity and the desire of many owners to try to flip their home shortly after the purchase. Two researchers, Wenli Li and Fang Yang, pretty much stated the obvious when they said that owning a home is not for everyone. They also suggest that our national obsession with making everyone a homeowner is an idea that has come and gone.
Of course, the recent statistics also bear out the thought that becoming a first time owner isn’t as valuable as it had been. First-time homebuyer activity declined, accounting for less than 40 per cent of sales, compared to the month of March, when almost 50% of new purchases were by first-time owners.
Of course, the fear is that the decrease in first-time homebuyers will impact overall home prices, forcing them further downward in the near future. First timers usually purchase what is considered excess inventory, such as some of the distressed homes, foreclosures and short sale properties that are so prevalent in today’s market. It’s pretty clear that the expiration of the tax credit that’s been a boon to the home-buying market in the last few years was a contributing factor in the decline of first-time buyers.
Certainly, programs in place to assist first-timers will keep them in the market, but the anticipation overall is that there were will be far less participation in the future, even the near future. Most states have specific programs available, which allow in many cases for down payment and closing costs assistance. These will assist in getting the first-timers into the marketplace, of course, and many of these programs afford borrowers favorable interest rates.
The percentage of home ownership in the nation has been declining, and consideration is being given, of course, to whether we ought to be giving so much attention to promoting it. After all, renters can use assistance as we all recognize, and some of the funding that’s been given to home ownership may be re-directed to the rental markets in the near future.
It seems that the benefits of owning a home may be lessened by some of the costs that are attributable to owning, such as declining home equity and the desire of many owners to try to flip their home shortly after the purchase. Two researchers, Wenli Li and Fang Yang, pretty much stated the obvious when they said that owning a home is not for everyone. They also suggest that our national obsession with making everyone a homeowner is an idea that has come and gone.
Of course, the recent statistics also bear out the thought that becoming a first time owner isn’t as valuable as it had been. First-time homebuyer activity declined, accounting for less than 40 per cent of sales, compared to the month of March, when almost 50% of new purchases were by first-time owners.
Of course, the fear is that the decrease in first-time homebuyers will impact overall home prices, forcing them further downward in the near future. First timers usually purchase what is considered excess inventory, such as some of the distressed homes, foreclosures and short sale properties that are so prevalent in today’s market. It’s pretty clear that the expiration of the tax credit that’s been a boon to the home-buying market in the last few years was a contributing factor in the decline of first-time buyers.
Certainly, programs in place to assist first-timers will keep them in the market, but the anticipation overall is that there were will be far less participation in the future, even the near future. Most states have specific programs available, which allow in many cases for down payment and closing costs assistance. These will assist in getting the first-timers into the marketplace, of course, and many of these programs afford borrowers favorable interest rates.
The percentage of home ownership in the nation has been declining, and consideration is being given, of course, to whether we ought to be giving so much attention to promoting it. After all, renters can use assistance as we all recognize, and some of the funding that’s been given to home ownership may be re-directed to the rental markets in the near future.
I personally feel that the expiration of the first time home buyer's tax credit has played a major role in the decline of home purchases recently. This tax credit had motivated a large number of first time home buyers to purchase properties. Apart from this, job loss and salary reductions are also playing a negative role when its comes to home purchase. If a person doesn't have a job or has a reduced income, he will never try to buy a home. Even if he tries to do so, lenders will not give them a mortgage.
That's the new rules, Adonis...not so long ago, before we hit crisis mode, lenders were falling all over themselves to give money to those who weren't credit-worthy. Remember? NINANE loans? You didn't even have to tell them where you worked and as long as you had mediocre credit, you could get a loan (up to 100% in many cases).
Thankfully, you're right in that those days are gone. For good? Let's hope and pray.
Thankfully, you're right in that those days are gone. For good? Let's hope and pray.
