Tuesday, September 1st, 2009
PROPERTY
BY JANE HODGES / ILLUSTRATION BY HEATHER GATLEY
Francia Doyle, a Seattle-based attorney, started her search in 2006. But back then, few homes she actually liked fit her budget. By spring of 2009, though, opportunities abounded. So Doyle pounced: She’s now the proud owner of a three-bedroom modern townhouse in the city’s Ballard neighborhood.
First-time buyers have struggled in recent years to get into a rapidly appreciating market, but a two-year decline has lowered prices and created vastly improved conditions for them. In fact, first-timers are dominating the market, accounting for more than 50 percent of all transactions thus far in 2009—a 10 percent increase from past years—according to data from The National Association of Realtors.
Several factors are helping spur this activity: Falling home prices, favorable mortgage interest rates and tax credits for first-time buyers offered at the federal level and, in some cases, the state or local level, are all making homes easier to purchase. (For federal tax information, visit www.federalhousingtaxcredit.com.)
Doyle benefited from all of these market changes, and knows she bought at a good time. She estimates that the $385K she paid for her 1500-square-foot home is at least $100K less than prices on an equivalent property in 2006.
“My trigger point for buying now was this: ‘Can I buy something I can afford that I also really like?’” Doyle says. “In this market, I could.”
Affordability has improved throughout the U.S., according to data from John Burns Real Estate Consulting, an Irvine, Calif.-based research firm. The company estimates that throughout the U.S., on average, homes cost 25 percent of a house-hold’s pre-tax income, down from 2006’s peak of 44 percent.
Doyle also says that her 30-year fixed mortgage’s 4.6 percent interest rate is much lower than the 6 percent rates she’d seen in the past, and that the lower interest rates let her buy a bigger home. The icing on the cake: She qualified for both an $8K federal tax credit for first-time home buyers that is available through 2009 as well as a locally available tax credit related to her mortgage.
First-time buyers do need to bring good credit and a healthy down payment to their mortgage lender to qualify for loans, and they need to understand the real estate landscape, which includes plenty of distressed properties. But, like Doyle, many fence sitters are finding that their options are now far more attractive than they once were.
