Why is this a Good Market for First-time Homebuyers?
Wednesday, November 12, 2008 at 9:23AM 
I think it is important that buyers know that this is probably the most unique market they will ever see in their lifetime. If ever there was a time to buy, it is now (Which is what threw the market into a buying frenzy). The truth is that some people are just followers. If everyone else is buying, followers want to buy. If everybody else is sitting on the fence, then followers want to sit. People need to think for themselves and look at what is out there. Can you analyze the information? How much less expensive is this same property than it was a year or year and one half ago? Do I think it is worth this amount? Do the homework, or have your agent do the homework.
When looking to buy a home, there are key questions that people need to answer honestly. The first is, how long do they plan on being in the home? Most first-time homebuyers will stay in their home for at least five years. All of the savvy economists are saying that it will take about a year to a year and a half to turn the economy around. So to me, that says that if we are at the low point now, prices are just going to slowly start rising. Remember: longevity is the key actor.
As to qualifying for a loan, we have finally reverted to the "good old way." The buyer has to have a job and earn sufficient income to support the payment. They have to have good credit. They must have a down payment. As it is commonly said, "You have to have some skin in the deal." Banks need to lend money to be able to make money. The money is there; it is just not for free anymore, or for a loss to the bank.
Think about it: prices may never be this low again. Sellers may never be as willing to negotiate. If you can, go out and buy something. You might be saving more money than you think.
Reader Comments (6)
"Think about it: prices may never be this low again."
Reminds me of something . . . . . . Oh yeah! that's exactly what my realtor told me early 2007.
Bob,
Sounds like you had a bad experience. The trend in 2007 was still one of prices increasing. From the end of 2007 to now, we have seen a reverse trend. How long this will last, no one knows for sure. I do hope you are happy in your home.
Genie Birch
President-Elect, Chicago Association of Realtors
Why would you suggest this if we haven't come close to reaching the bottom in most markets? So those poor souls who saved enough to actually qualify in this market can buy a house now so it can further depreciate over the next year? The only people telling others now is the time to buy are the real estate agents unable to sell anything right now.
Unique market......ha!
We have been telling our agents to be willing to make the kind of statement Genie did if they truly believe they know their market and have researched activity there.
Whether you are a realtor, are active in the market or are an observant consumer, there are clear indications of seller resistance to lower pricing.
All real estate is micro; some areas are stronger than others, and in every area of the city there are opportunities for smart buyers to make educated investment and housing decisions. None of us can predict the events of tomorrow's news, but we can analyze numbers, observe behavior and see the possibilities in today's environment for profit and getting a great home at a great price.
Bob,
In 2007, I believe many did hear this from some folks. Unfortunately, forecasting is not a clear science for Economists or Real Estate Professionals (who look at the world as glass half full vs. half empty). At any point in time, prices may go up and prices may go down as a response to market forces that are out of our/everyone's control. It is important to keep abreast of market changes in Real Estate, and as a consumer, that's a good thing: to learn as much as you can about your marketplace. I still believe Real Estate is a wise investment and because of volatility of Financial Markets as seen on Wall Street, we know that are housing, investment, and financial systems are connected to each other.
Consumers and Real Estate Professionals do know something: a home's value is not only decided by monetary means but also by the basic need for shelter, a place to hang your hat. A haven that is a place which offers favorable opportunities and serves as a sanctuary at days end.
Mabel Guzman
C.A.R Treasurer
As a longtime Northshore Resident in the Chicagoland area, and having been a Realtor throughout the real estate "boom" when Sellers were "king" and buyers
were many and negotiating sale prices down on behalf of the buyers was difficult and often multiple offers were already on the table...... I see this period as an adjusting time and an opportunity for those
WHO ARE BUYING THEIR FIRST HOME, whether a condo, townhouse or single family home.....many now can afford them and probably will have their best opportunities this year and in 2009
in my view it is also a great time for those who have been thinking about upgrading....
Any home owner, who was thinking over the past fiew years when prices were going up if they should move to a larger home, a different suburb, a larger lot, a new construction, whatever their idea of "upgrade" was, this
is their time to look for that new home.
Many sellers are hesitating to put their current home on the market as they can see by neighboring sales, that they will not have the profit that they were counting on 3+ years ago.... But I keep on reminding them that whatever loss they feel they incur in the sale of their current smaller home, they will make up
by far in the purchase of the larger, newer home.
Assuming that their current house was value at 400 K and now will sell
around 25 % below that at 300 K they are selling for 100 K less
But if they upgrade to a much higher valued property that would have
sold before at 800 K and they can purchase it at 25% less today
they are getting this upgraded home for 200 K less than before and they
are still 100 K better off
So I am encouraging all first time home buyers to check their finances, talk with a reputable lender and start looking - WITH ME HOPEFULLY!
I encourage all those who always thought about upgrading to put the numbers in perspective and start looking as well....
And this is also a good time for investors with capital....
I am curious about anybody else's thoughts on how to encourage the consumers to look at homes and buyduring these economic times - especially in those two a.m. categories!
Edith - Your Chicago Connection