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Broker's Opinion

Opinion and comments on general real estate practices and activity in Colorado Springs.

First Time Home Buyers

Now is the time for first-time home buyers to get in the market. 

What they will find are much more favorable conditions than they have seen in years, including lower down payment mortgages, looser lending standards and a bigger selection of homes to choose from.

Here are four housing market trends economists and other industry experts expect to see in the year ahead.

1. Looser lending standards

In early December, Fannie Mae and Freddie Mac put new lending guidelines in place and started offering 3% down payment mortgages that will make it easier for more first-time buyers to qualify for a mortgage. 

Add to that a strengthening job market, and prospects look much brighter for young home buyers.

According to the Mortgage Bankers Association, sales of new homes are expected to climb by more than 13% in 2015, while existing home sales are expected to increase by 5%.

A spike in the number of first-time home buyers should spark a chain reaction by enabling existing homeowners to sell their homes and buy more expensive ones.

2. There will be more homes to choose from

Builders are ramping up production of smaller homes to accommodate these new entry-level buyers, said Stan Humphries, chief economist for Zillow.

Homebuilder D.R. Horton formed Express Homes, to build no-frills homes ranging in price from $120,000 to $150,000, about half the average price of the homes it normally builds. Other builders, like LGI Homes and KB Homes are also targeting first-time buyers.

3. Home prices will become more affordable

With so many new homes slated to come onto the market, the supply is expected to loosen up and take some pressure off of home prices. That should improve affordability in some of the more out-of-reach metro area markets like Washington, D.C., San Jose, Calif., and Seattle.

Plus, says Robert Shiller, the Nobel-Prize winning economist and co-founder of the S&P/Case-Shiller home price index, "home prices look somewhat expensive." In fact, he thinks a decline in home prices is a "distinct possibility."

4. Mortgage rates will move higher -- at some point

If there's any single market trend that real estate industry pros have gotten consistently wrong lately, it's the direction of mortgage rates. But most do expect rates to rise at some point in 2015.

In short, with rents rising faster than incomes, many people are looking to buying a home of their own.   Now is a good time to start looking and hiring a Realtor to help.       CNN Money - Dec. 2014 






 



 


 

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