| With home sales slowing down and condo prices | | | | The 1st time buyer will normally start with a one or |
| slipping sellers all across the country seem unable to | | | | small two bedroom house or condo with the hope that |
| get their asking price. | | | | price rises will allow then to "Move Up" to a bigger 3 |
| Christopher Mayer, a Columbia University economics | | | | bedroom home in a better area within a short period |
| professor said recently "If you're expecting a | | | | of time, say one to two years. Slower price rises or |
| short-term gain, you should be looking elsewhere," he | | | | higher interest rates will put the loan repayments on a |
| had argued for many years that land shortages and | | | | new larger home out of the reach of the buyer and |
| rising populations would translate into ever-rising prices | | | | this leads to the whole market getting weaker. |
| in the "superstar" cities like New York and San | | | | The Europeans have an interesting system in place, |
| Francisco and LA. | | | | credit scores have no bearing on the way they |
| With many of the real estate bulls now waving the | | | | calculate your ability to repay the loan. Under the |
| caution flag we have clearly reached the time for a | | | | banking and home loan laws you most provide proof |
| re-think on this subject. Before we start going down | | | | of income, once this is done they will offer you the |
| the "Doom and Gloom" road it should be understood | | | | chance to finance up to 4 times your income. Most |
| that owning your own home is still the corner stone of | | | | programs will finance up to 90% of the loan to value |
| the "American Dream" and it will always be that way. | | | | of the property this system seems to ensure a steady |
| What does it take to fuel that dream, home prices are | | | | supply of 1st time buyers along with regular increases |
| normally driven by 3 things. The first is low interest | | | | in house prices with affordable loans. |
| rates, the second is the willingness of home buyers to | | | | LA and New York are the so called "Super Star" |
| pay for their idea of the American Dream and lastly | | | | markets and not really reflective of the whole county, |
| the ability to attract 1st time buyers to the market. | | | | so your strategy will largely depend on where you live. |
| Let us take a look at Los Angeles as a market place | | | | Local markets are affected by many forces like jobs, |
| for home buyers, the average home sells for 10 times | | | | the new house market and inflation to name but a |
| the average salary. Whatever way you look at it this | | | | few. Homeowners who hold on to their homes for a |
| is unsustainable, no matter how creative the banks and | | | | number of years and pay down their debt do far |
| lenders become with their new programs. As it | | | | better than those who refinance every two years |
| becomes more difficult for the 1st time buyer to enter | | | | taking out the equity they have built up, this really is the |
| the market it starts to affect "Move Up" market. | | | | Number One Cardinal Sin for homeowners. |