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