FORT LAUDERDALE, Fla. — The stabilizing housing market is becoming a curse for first-time homebuyers.
Despite affordable prices and historically low mortgage rates, these buyers are being shut out of the market by strict lending standards and a dearth of homes for sale. When they do find a place, it’s also targeted by investors whose cash offers make sellers swoon.
Ally Apostolis and her boyfriend, Steve Momot, have been looking for a home since March. They found the perfect place, a three-bedroom in Fort Lauderdale for $149,000. They bid just above the list price but still lost the home to a cash buyer.
Late one night, Apostolis found another home she liked, but it already was off the market by the next morning.
“We’ve had a rough time,” said Apostolis, 26, an executive assistant for an oil hedging firm. “If this doesn’t work out, it’s going to be a stressful road ahead of us.”
First-time buyers are considered the backbone of the nation’s housing market. When young, single professionals or newly married couples buy and furnish homes, the ripple effect stimulates the economy. Traditionally, these buyers use the profits from the sales of first homes to buy bigger properties, creating a confidence that typically sustains the market for years to come.
“You constantly need a fresh crop of first-time buyers coming in to an area to a have a healthy housing market,” said Greg McBride, senior financial analyst with Bankrate.com in North Palm Beach, Fla.
“Without the starter home market, you don’t have a recovery,” said Lewis Goodkin, a housing consultant based in Miami.
First-time buyers accounted for roughly a third of all home sales nationwide in May, according to the National Association of Realtors. Ideally, the percentage should be 40 percent or more, said Walter Molony, a spokesman for the Realtor trade group.
Almost all first-time buyers need financing, which has been difficult to get following the housing boom. Many first-time buyers prefer Federal Housing Administration loans because they require only 3.5 percent down payments.
But sellers worry that FHA deals will fall apart, real estate agents say. The government insists that FHA-eligible homes be in good condition, requiring sellers to make repairs, such as replacing rotted wood and installing a working pool pump.
Because sellers don’t want the hassle and expense, they prefer dealing with cash buyers, who tend to buy homes as-is.
