Are First-Time Home Buyers Shut Out From Livermore Real Estate?

Livermore home buyersYou’ve heard it before: home prices are affordable, mortgage rates are at historic lows, and it’s a great time to buy a California home! Yet the number of first-time home buyers is on the decline. Let’s take a look at the facts and the issues behind the trend.

According to the National Association of Realtors, first-time buyers normally represent 40% of home buying activity nationwide. But in the past five years, that percentage has dropped to 35.9%. During the past three months, first-time buyers accounted for only 30% of the market.

Normally, when there are fewer buyers for entry-level homes, it can depress the market. But investors have been buying up enough homes that it has masked the issue. While cash buyers have been a valuable force in the housing market for the absorption of foreclosures, they expanded their sights beyond foreclosures as discounted inventory dried up.

Competition from investors isn’t the only challenge facing first-time home buyers in California. Here are a few others:

– The Great Recession took a large bite out of wages and job opportunities. Younger employees who lost jobs and income in recent years are still recovering.

– Tougher mortgage underwriting guidelines, including higher credit score requirements and tighter debt-to-income ratios.

– Student loan debt. College students are graduating with higher debt obligations than in previous years, while facing lower wage scales. A Pew Research study says that about $27,000 in student loans is “average”, while about 10% of graduates have student loan balances of $60,000 or more. This debt affects the affordability calculations used by mortgage lenders.

– Reduced home inventory. This is especially challenging if you are pre-approved for a mortgage that doesn’t match current home prices.

What can home buyers do, to help level the playing field?

Start by taking a hard look at your debts, and tackle the big ones. These are what hurt your mortgage qualifying ratios the most. For example, if you have student loans, you may be able to consolidate the debt, or request a forbearance for a temporary period so you can pay off other bills. You can find out more about these solutions by visiting the U.S. Department of Education website.

Control your spending. Minimize use of credit cards, and keep any car payments, cell phone contracts and cable TV bills as low as possible – and eliminate them where you can. Don’t buy things you don’t need; create a sensible budget and stick to it. Park surplus cash into savings.

Also remember that the Livermore real estate market is always changing! Yes, home inventory is low at the moment, but that will change as more homeowners recover equity and place thier homes on the market. In the meantime, get your finances in order, keep them that way, and don’t give up!

Looking for more information about buying a Livermore home? Let me help you! I will refer you to reputable mortgage lenders in the area, and I can help you find the ideal home for your needs and budget. Please feel welcome to contact me for the latest home sale details in Livermore, Pleasanton or Dublin. I’ll answer all of your questions, and provide you with expert guidance for success!

John Kurtzer
Your Livermore Real Estate Expert
RE/MAX Accord

Livermore Real Estate
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