Low Home Prices — Bonanza for First Time Home Buyers and Investors

Published by nora | Filed under Buyer / Seller Tips, Market Trends, Miscellaneous, Mortgage / Finance, Real Estate

While low home prices are a bane to sellers, builders and homeowners, these deeply discounted prices represent blessings to first time home buyers, young buyers and investors.

First time home buyers have been receiving windfalls since 2009 when the tax credit incentive program was implemented to encourage them to buy. Aside from this incentive, a number of them also enjoyed additional financial assistance from their state or local governments. They were also able to buy larger homes or more beautiful homes that previously they couldn’t afford.

Even today, after the tax incentives expired, first time homebuyers are still enjoying situations that were not enjoyed by people who purchased their homes before the foreclosure crisis. The other group blessed by current situations in the housing market consists of investors who have cash or loan privileges and those who did not purchase overpriced investment properties before the crisis.

First time homebuyers today are enjoying the following advantages:

• They’re not burdened with the need to sell their home to be able to buy a better home with lower monthly payments.
• They’re not saddled with high-interest residential mortgages.
• They have a lot of housing inventory to choose from.
• They can still enjoy among the lowest mortgage interest rates in U.S. history.
• Their financial capabilities will be thoroughly assessed, preventing a situation where they’re burdened with mortgage loans they cannot pay. Before the housing meltdown, a huge number of mortgage applications were approved without proper screening.
• And most significantly, they’re buying a home at a time when the prices of both new and existing homes are relatively low.

According to the HUD, the housing affordability index has increased to 187.8 in March 2011, up from 166.3 in December 2008 and from 173.8 in March 2010.
In February, the Case Shiller home price index dropped to 139.3, down from 144.1 in February 2010.

The metro areas with the biggest drops in median home prices for existing homes in the first quarter were the following:

Metropolitan Areas	Median Home Prices	Rates of Increase Year-Over-Year
Gulfport-Biloxi, Mississippi	$99,400	22.8 percent
Akron, Ohio	$74,900	21.4 percent
Salem, Oregon	$153,500	20.6 percent
Dayton, Ohio	$78,000	20.3 percent
Cleveland-Elyria-Mentor, Ohio	$87,000	19.7 percent
Miami-Miami Beach-Fort Lauderdale, Florida	$153,600	19.7 percent
Ocala, Florida	$75,400	18.8 percent
Allentown-Easton-Bethlehem, Pennsylvania-New Jersey	$186,200	18.4 percent
Tucson, Arizona	$136,800	18 percent
Cumberland, Maryland	$80,700	17.9 percent

Median prices for existing homes in the Tampa area also dropped in the first quarter by 15.2 percent to $113.60. For assistance in buying an affordable home in Tampa, contact the friendly real estate professionals of Tampa4U.