First-time homebuyers shut out in some cities
Falling prices had made homeownership more affordable, but only in some areas. In some major cities, working couples still can't afford to buy.
By Teresa at MSN Real Estate Jun 8, 2012 9:50AM
One of the silver linings to the sharp decline in home prices in the past five years is that first-time homebuyers who had been shut out of the market were able to afford homes again. Unless they lived in expensive areas such as New York, Boston, Hawaii, San Francisco and other places where median home prices still are far above the ability of working couples to afford.
Teachers Steve and Logan Kinney, who lived in the New York City borough of Brooklyn, have excellent credit and would like to buy a house. But their budget of $250,000 puts most of the New York City area out of reach.
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"Unless you are a lawyer, owning a home is out of the question," Steve Kinney told The New York Times. He notes that the couple would have to save a full year's salary to come up with a 20% down payment. To help them save, they have moved to Rockaway Beach, meaning that Logan Kinney spends three hours a day commuting.
Citing statistics from Fiserv Case-Shiller, The Times notes that prices nationwide have fallen 32% from their peak. The national median home price is $166,000, a level not seen since the mid-1990s and down substantially since the peak, when the median price was $226,000.
But if you look at a number of larger cities, the median home price far exceeds the ability of a couple with the median household income to buy. The Times writes:
In fact, prices in several metropolitan areas — including New York, Los Angeles and Boston — will end up being higher than their pre-bubble levels, at least relative to local income, said David Stiff, an economist at Fiserv Case-Shiller, which tracks the real-estate market. There are a few reasons, but one of the main drivers is the work force: these areas develop pools of specialized, highly compensated employees.
In Washington, D.C., homes are relatively affordable in the outer suburbs in Maryland, but would-be homebuyers are having a hard time finding homes they can afford closer to central D.C.
"It’s very difficult to get a house in a desirable neighborhood for less than $400,000," Andrew Riguzzi, a managing partner at D.C. Real Estate, told The Washington Post. "If they’re out there, they probably haven’t been cared for and need several thousand to bring them up to conditions."
First-time homebuyers David Albersheim and Andrea Cohen have been looking for months for a home near a D.C. Metro station for less than $400,000.
"It’s frustrating because I feel like I’m wasting time looking for houses every Sunday," Cohen told The Post. "I do have faith that we’ll eventually find the right one, though. I’m trying to stay optimistic."
| Tags: | buyingfirsttimebuyers |
15Comments
Aug 19, 2012 9:28AM
Aug 19, 2012 2:52AM
It is tough being a first time homebuyer ( I live in the Boston area) but it can be done. The clue is to not be a snob. I bought my first home for far less than anything you could find in Boston by moving a meager 14 miles outside of it. Public transportation is very good in this area and you don't need to live in Boston to work in it. Not sure what the problem is here.
Jun 16, 2012 9:48AM
Jun 16, 2012 9:24AM
While I am very angry with our Governor for discontinuing the WI VA Mortgage program thereby causing us endless headaches trying to refinance the mortgage for the house (I hold the note in my hand from the WI VA Mortgage, now worthless) because we somehow lost our VA status on the loan when the originator sold it, I am glad we own our own home. It took us two years to find one our affordable mortgage would afford.
I am not glad we could only afford a dinosaur of an old uninsulated home with our affordable mortgage, which is what is breaking the bank and making it tough on us, now. In our case, the energy bills are the problem. We've reached the point where all the energy improvements we made, new doors and half new windows, have been perfectly offset by energy rate increases. Which turns out to be okay, because, we stalled out due to lack of spending money, and discovered, we will have to properly ventilate this dinosaur, too. And, because of this, we decided to seek a refinance to take advantage of interest, finally two points lower than ours. But, it may not come to pass, all because of a certain WI Governor deciding, with a wipe of a pen to end the WI VA Mortgage program and direct us all to the federal programs...but I digress.
Houses are expensive. In our case, the cost of owning a home is far greater, so far, than the cost of raising our single child. And, we drive old paid for cars, too, insured as little as possible and fixed by my mechanic spouse, so, it is the house that is draining us, not the kids.
I am not glad we could only afford a dinosaur of an old uninsulated home with our affordable mortgage, which is what is breaking the bank and making it tough on us, now. In our case, the energy bills are the problem. We've reached the point where all the energy improvements we made, new doors and half new windows, have been perfectly offset by energy rate increases. Which turns out to be okay, because, we stalled out due to lack of spending money, and discovered, we will have to properly ventilate this dinosaur, too. And, because of this, we decided to seek a refinance to take advantage of interest, finally two points lower than ours. But, it may not come to pass, all because of a certain WI Governor deciding, with a wipe of a pen to end the WI VA Mortgage program and direct us all to the federal programs...but I digress.
Houses are expensive. In our case, the cost of owning a home is far greater, so far, than the cost of raising our single child. And, we drive old paid for cars, too, insured as little as possible and fixed by my mechanic spouse, so, it is the house that is draining us, not the kids.
Jun 16, 2012 9:09AM
First-timers have ALWAYS had it tough to get a home in thhe areas you cover in this puerile piece of propaganda - the solution used to be "buy the "home" and live with orange crates covered with fabric remnants and mattresses on the floor for the first few years until the couple's income caught up and the first child was in the oven or on the scene.
Now, everyone seems to expect it all, including a new neighborhood-level car, decorator perfect interiors and the latest in techno-toys. Ya want toys, forget the house.
Jun 16, 2012 8:46AM
Might I suggest finding a job and then buying a home in one of the 100 urban areas in America where the average home price is well below the national median? Right now you can buy a nice house in suburban Detroit or suburban Cleveland for well under $100K. Even here in suburban Denver, CO where I live there are plenty of newer 2-bedroom condos for sale for under $125K and plenty of older homes available for not much more dough too. Heck, a $250K home budget here would buy quite a few newer 3 bedroom/2 bath suburban single-family houses here and leave enough left over to buy a new car too!!!
If you really want to go cheap, there are plenty of nice houses in Canton or Youngstown, OH, and in lots of smaller cities in Kansas that can be had for under $50K too.
If you really want to go cheap, there are plenty of nice houses in Canton or Youngstown, OH, and in lots of smaller cities in Kansas that can be had for under $50K too.
Jun 16, 2012 8:20AM
Hey Hawaii is NOT a city. It is a state composed of expensive and relatively cheap places. A couple CAN find a home at the national median price in Hawaii (on one of the outer islands), However if you need electricity, water and sewer lines, schools, hospitals, police and fire protection, department stores, fine restaurants, culture and crime, 7-11 marts, and McDonalds then one must have to pay the price and move to a more urban environment.
Jun 16, 2012 7:58AM
The unfortunate thing is that home ownership is no longer feasible for the average person. It is difficult to save up a down payment with the skyrocketing prices of everything else like gas and food. My Boeing engineer sister is unable to save a down payment because of the high cost of living in the Seattle area. There are programs to help, but they are nearly impossible to qualify for, and sometimes put you somewhere you aren't happy with. The only way we were able to finally buy a home was a USDA rural loan, and a desperate builder who required only $500 down. Unless you are one of the very lucky few, home ownership is no longer part of the American dream.
Jun 16, 2012 7:55AM
"...far above the ability of working couples to afford."
This is bad in itself but what about when this "working couple" wants to have kids? So they've already broken the bank with both of them working full time professional jobs just to get into a house. Now what? How can they possibly afford to have kids? Add the expenses of having a child but also the tough choice of paying for child care ($500 to $1000 a month if your lucky) or one parent staying home till the child or children start school.
So you say don't have kids unless you can afford it? Where is that getting us today? I'm in my 30's and out of most of my friends and colleagues I am in a very small minority because I have kids. And I'm poor now because of it. So are the other people my age with kids with very few exceptions. So what's happening is the people that should be having kids, (the intelligent, middle class, hardworking couples) are choosing not to because they can't afford it. So the next generation will be the very poor who don't care and have kids anyway and the very rich who will have a couple kids and make sure they go to top schools despite their behavior and intelligence and only based on connections. This does not make for a very good outlook for the future.
Housing prices need to become affordable again for working families. And dare I say they become affordable for a single income household like my parents? I'm all for women's rights but women entering the workforce as rule was not a good idea for the housing market. It drove up prices drastically and made it nearly impossible for one parent (father or mother) to stay home and raise their kids while the other supported the family with one income. Not only that, it took away the cushion that families had should one lose a job. My feeling is that this mortgage crisis we're currently in could have been averted if loans had been based on one earner per family instead of two.
With the concept of "working couples" if one loses a job they are screwed once their savings drys up. Many have no savings to begin with because they've overextended themselves just to get into a house. So within a couple of months they're in deep financial trouble. This was not so 30 years ago. At that time, like many households, my father earned the money, my mom stayed home with the kids. But during the mid eighties their was a recession as well. My father, who worked as a building contractor found himself without steady income. But the saving grace that kept our family afloat was that my mother had the option of going to work. She got a decent job that was enough to cover the loss of my father's income. So we kept our house, we kept our cars and we got by.
And even now, if you have a two income household but your mortgage is based on one income, think of the money people would have to spare. That way they could afford to save for the future and afford a lot of extras. Think how the economy would improve if almost every couple or family had and extra yearly income at their disposal instead of just getting by with it.
This is bad in itself but what about when this "working couple" wants to have kids? So they've already broken the bank with both of them working full time professional jobs just to get into a house. Now what? How can they possibly afford to have kids? Add the expenses of having a child but also the tough choice of paying for child care ($500 to $1000 a month if your lucky) or one parent staying home till the child or children start school.
So you say don't have kids unless you can afford it? Where is that getting us today? I'm in my 30's and out of most of my friends and colleagues I am in a very small minority because I have kids. And I'm poor now because of it. So are the other people my age with kids with very few exceptions. So what's happening is the people that should be having kids, (the intelligent, middle class, hardworking couples) are choosing not to because they can't afford it. So the next generation will be the very poor who don't care and have kids anyway and the very rich who will have a couple kids and make sure they go to top schools despite their behavior and intelligence and only based on connections. This does not make for a very good outlook for the future.
Housing prices need to become affordable again for working families. And dare I say they become affordable for a single income household like my parents? I'm all for women's rights but women entering the workforce as rule was not a good idea for the housing market. It drove up prices drastically and made it nearly impossible for one parent (father or mother) to stay home and raise their kids while the other supported the family with one income. Not only that, it took away the cushion that families had should one lose a job. My feeling is that this mortgage crisis we're currently in could have been averted if loans had been based on one earner per family instead of two.
With the concept of "working couples" if one loses a job they are screwed once their savings drys up. Many have no savings to begin with because they've overextended themselves just to get into a house. So within a couple of months they're in deep financial trouble. This was not so 30 years ago. At that time, like many households, my father earned the money, my mom stayed home with the kids. But during the mid eighties their was a recession as well. My father, who worked as a building contractor found himself without steady income. But the saving grace that kept our family afloat was that my mother had the option of going to work. She got a decent job that was enough to cover the loss of my father's income. So we kept our house, we kept our cars and we got by.
And even now, if you have a two income household but your mortgage is based on one income, think of the money people would have to spare. That way they could afford to save for the future and afford a lot of extras. Think how the economy would improve if almost every couple or family had and extra yearly income at their disposal instead of just getting by with it.
Jun 16, 2012 6:12AM
Jun 16, 2012 5:22AM
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About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.
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