Business

First-Time Buyers Face Hurdles to Homeownership This Spring

Published

10 years ago

May 12, 2015

In this May 11, 2015 photo, Brett Singley, upper right, poses for a picture in front of their condo with his wife, Angelynn, 28, Isla 5, middle, Isaiah 3, right, Ben, 2, and Aria 1 month, in Santa Clarita, Calif. Singley bought the three-bedroom home for just under $300,000 $100,000 less than what he was prepared to pay for a house. (AP Photo/Chris Carlson)

ALEX VEIGA, AP Business Writers
JOSH BOAK, AP Business Writers

Young people aspiring to buy their first home are already facing disappointment this year.

Rising prices are putting more homes out of reach, and pickings are slim because few properties have come onto the market this spring, when sales are supposed to take off.

Millennials are also burdened by heavy school debt and depleted savings that hurt their ability to qualify for a mortgage. Until their incomes start to rise meaningfully, many will be forced to keep hunting for a home while delaying the dream of ownership. This has weighed on overall home sales and economic growth throughout the rebound in housing the past three years.

“People need to see more money in their paychecks before they’ll take the plunge into homeownership,” said Greg McBride, chief financial analyst at Bankrate.

If early signs are any indication, there won’t a noticeable jump in new homeowners during the spring.

Amy Arnold and her husband began looking at listings in Denver late last year. The 28-year-old apparel buyer quickly found that the few homes in the couple’s price range got snapped up for more than asking price, leaving her exasperated at how “crazy” the market seemed.

For now, the couple has decided to keep renting a two-bedroom, one-bath house for $1,300 a month, hoping to have more money and find a better selection of homes once they jump back into the market.

“It’s very discouraging,” said Arnold. “Hopefully next year we will be able to buy, but there’s a chance we may have to rent again.”

Home prices nationwide have risen at more than double the pace of average hourly wages, making it harder for buyers to find the extra funds to save for a down payment.

In Denver, a limited roster of homes has fueled the rising prices and given sellers the upper hand. Forty percent of homes that sold in February went for more than the asking price, according to online real estate broker Redfin. That’s up from 21 percent a year earlier. In addition, half of the homes on the market went under contract in eight days or fewer.

“Typically, January, February even March are not quite as highly competitive as when you go into the spring months,” said Ilona Botton, a Redfin agent in Denver. “That’s not how it was this year. It has been multiple offer situations every single month.”

The limited supply of homes is widespread. In March, one measure showed it would take fewer than five months to sell all the previously occupied homes in the U.S. In a market more balanced between buyers and sellers, it would take about six, according to the National Association of Realtors.

What’s more, heavy demand for low-priced homes means their prices are rising faster. Homes priced at $135,000 or less jumped 9 percent for the year ending in February, according to data from CoreLogic. Homes that priced at $226,800 or more climbed 5 percent over the same period.

Beyond offering more money, some buyers are willing to waive home inspection or give sellers several weeks to move out following a sale, said Redfin’s Botton.

In general, areas with fewer homes for sale have stronger job growth that eclipses the pace of construction. Areas with larger inventories tend to keep the availability of housing in line with job growth.

In Columbus, Ohio, aviation company executive Ryan Holtmann had plenty of options. He and his wife started shopping for their first home at the end of last year. The couple visited about 15 to 20 houses before buying a three-bedroom home for $154,900 at the end of February.

“I was really surprised at how much was out there for the time of year,” said Holtmann, 33. “There were three or four we liked and would have been more than happy to go with.”

One factor preventing more houses from hitting the market is that many homeowners still owe more on their mortgage than their home is worth. That’s known as an underwater mortgage, or being in negative equity.

While millions of homes have returned to positive equity as values come back, some 5.4 million, or 10.8 percent of all homes with a mortgage, remained underwater as of the October-December quarter, according to CoreLogic. Nevada topped the list. Nearly a quarter of its homes with a mortgage were underwater.

More construction would help buyers, but activity has recovered slowly since 2010. That’s one reason a recent report by mortgage buyer Freddie Mac forecast that the U.S. housing market will continue to see low levels of homes for sale for the next several years.

As a result, even successful buyers are settling for less.

Brett Singley, a first-time buyer in Los Angeles and a father of four, knew the kind of house he wanted and how much he could afford. But after six months of searching, the civil engineer shifted his sights to smaller and less expensive townhomes. In March, he bought one in Santa Clarita, a northern suburb. He got a three-bedroom for just under $300,000 — $100,000 less than what he was prepared to pay for a house.

“We were originally looking for a four-bedroom house,” said Singley. “But we didn’t have a lot of options.”

___

Veiga reported from Los Angeles. Boak reported from Washington.

Oakland Post

Posts by Oakland Post

Up Next

Verizon-AOL: Another Deal Without Big Banks

Don't Miss

Fed Said to Have Debt Ceiling Plan Involving Market Interventions

Oakland Post

Click to comment

Activism

Oakland Post: Week of December 25 – 31, 2024

The printed Weekly Edition of the Oakland Post: Week of December 25 – 31, 2024

Published

19 hours ago

December 26, 2024

Oakland Post

To enlarge your view of this issue, use the slider, magnifying glass icon or full page icon in the lower right corner of the browser window.

Oakland Post

Posts by Oakland Post

Bay Area

Glydways Breaking Ground on 14-Acre Demonstration Facility at Hilltop Mall

Glydways has been testing its technology at CCTA’s GoMentum Station in Concord for several years. The company plans to install an ambitious 28-mile Autonomous Transit Network in East Contra Costa County. The new Richmond facility will be strategically positioned near that project, according to Glydways.

Published

3 days ago

December 24, 2024

Oakland Post

Image of planned Richmond facility courtesy of Glydways.

The Richmond Standard

Glydways, developer of microtransit systems using autonomous, small-scale vehicles, is breaking ground on a 14-acre Development and Demonstration Facility at the former Hilltop Mall property in Richmond, the Contra Costa Transportation Authority (CCTA) reported on social media.

Glydways, which released a statement announcing the project Monday, is using the site while the mall property undergoes a larger redevelopment.

“In the interim, Glydways will use a portion of the property to showcase its technology and conduct safety and reliability testing,” the company said.

The new Richmond development hub will include “over a mile of dedicated test track, enabling Glydways to refine its solutions in a controlled environment while simulating real-world conditions,” the company said.

Visitors to the facility will be able to experience on-demand travel, explore the control center and visit a showroom featuring virtual reality demonstrations of Glydways projects worldwide.

The hub will also house a 13,000-square-foot maintenance and storage facility to service the growing fleet of Glydcars.

“With this new facility [at the former Hilltop Mall property], we’re giving the public a glimpse of the future, where people can experience ultra-quiet, on-demand transit—just like hailing a rideshare, but with the reliability and affordability of public transit,” said Tim Haile, executive director of CCTA.

Janet Galvez, vice president and investment officer at Prologis, owner of the Hilltop Mall property, said her company is “thrilled” to provide space for Glydways and is continuing to work with the city on future redevelopment plans for the broader mall property.

Richmond City Manager Shasa Curl added that Glydways’ presence “will not only help test new transit solutions but also activate the former Mall site while preparation and finalization of the Hilltop Horizon Specific Plan is underway.

Oakland Post

Posts by Oakland Post

Activism

2024 in Review: 7 Questions for Outgoing Stockton Mayor Kevin Lincoln

Lincoln’s decision to run for mayor stemmed from his love of people and his desire to serve his city. He prioritized resolving issues, including homelessness and public safety, among others. Lincoln, a Republican, will transition out of his role as mayor on Dec. 31, after an unsuccessful campaign to represent the 9th Congressional District.

Published

3 days ago

December 24, 2024

Oakland Post

Stockton Mayor Kevin Lincoln. Photo provided by California Black Media.

Kevin Lincoln, outgoing mayor of Stockton, CA, captured during his tenure as a leader dedicated to the city’s progress and community engagement.

By Edward Henderson
California Black Media

Born in Stockton, Mayor Kevin Lincoln says his Army upbringing inspired him to serve others.

Lincoln joined the United States Marine Corps in 2001 and was later assigned to Marine One, serving during President George W. Bush’s administration.

Following his military service, Lincoln worked for one of the nation’s top private security companies for eight years in Silicon Valley. In 2013, he resigned from his corporate position to give back to his community in Stockton through full-time ministry at a local church.

Lincoln’s decision to run for mayor stemmed from his love of people and his desire to serve his city. He prioritized resolving issues, including homelessness and public safety, among others.

Lincoln, a Republican, will transition out of his role as mayor on Dec. 31, after an unsuccessful campaign to represent the 9^th Congressional District.

Recently, California Black Media (CBM) spoke with Lincoln. He reflected on his accomplishments this year and his goals moving forward.

Responses have been edited for length and clarity.

Looking back at 2024, what stands out to you as your most important achievement and why? 

What I prioritize for our city council is our youth. They are the future — not only our city, but this region as a whole.

We were able to invest over $6 million in youth programming and workforce development, and partner with 14 different community-based organizations. We were able to employ over 600 young people through the city of Stockton. We launched even our first ever summer jobs program for the city of Stockton.

How did your leadership and investments contribute to improving the lives of Black Californians? 

It’s about giving people a seat at the table, and not necessarily waiting for people to come to me, but me going to the community, making myself accessible, meeting our community at the point of their need, where they’re at.

What frustrated you the most over the last year?

It’s politics. Because unfortunately, there’s politics in everything. And I say politics impedes progress. You can have a policy, a solution that may not necessarily be 100% perfect. But it’s a good solution for everybody. But because we allow politics to get in the way based off our personal ideologies, oftentimes we can miss opportunities to make an impact for the benefit of the whole.

What inspired you the most over the last year?

My biggest inspiration has been the community and our ability to work together. What’s unique about Stockton, one in 20 jobs are nonprofit jobs in the city of Stockton and even San Joaquin County.

What is one lesson you learned in 2024 that will inform your decision-making next year?

To stay focused. In politics, there’s a lot of opportunity for distractions. There are a lot of influences from the outside — good, bad and indifferent. It’s important to stay focused, have a clear vision, and be committed to that vision.

In one word, what is the biggest challenge Black Californians face?

Economics. When the economy is not healthy, when we’re not thriving, we’re limited. Opportunities are limited.

What is the goal you want to achieve most in 2025?

I just want to continue to be a servant leader and serve our community in whatever capacity I am in.