First-timers worry about jobs,

 credit

Century 21 survey: Buyers see homes as

 affordable

By Inman News, Friday, March 27, 2009.

Inman News

Most prospective first-time homebuyers know interest rates are low and believe that homes are affordable. But nearly half don't know about the $8,000 tax credit available to first-time homebuyers through the end of November, and three in four say it's hard to get a loan.

Those are some of the key findings of a survey of 1,000 prospective first-time homebuyers conducted in early March for Century 21 Real Estate LLC.

Only people who said they were likely to buy a first home in the next two years were included in the survey, with about one in four saying they planned to purchase in the next six months.

While 42 percent of those surveyed said they'd be comfortable buying a home in the current market, 48 percent said they are waiting for prices to go down further.

Among renters, 91 percent said they would be likely to buy a home in the next six months if they found an acceptable home with monthly mortgage payments within $250 of their current rent.

About 85 percent of all of those surveyed said they consider current home prices to be affordable, and 68 percent think now is a better time to buy than six months ago.

Among those looking to buy in the next six months, 69 percent said they were worried about home prices rising if they didn't act soon.

But three out of four potential first-time homebuyers think it's difficult to get a loan, and only 41 percent were aware of a first-time homebuyer tax credit that's available through the end of November.

The credit -- equal to 10 percent of the purchase price up to a cap of $8,000 -- is available to anyone who meets income eligibility limits and hasn't owned a primary residence in the last three years.

Whether they'd heard about the credit or not before being surveyed, 77 percent said it would make them more likely to buy a home in the next six months.

Interest rates on loans eligible for purchase or guarantee by Fannie Mae and Freddie Mac have hit historic lows, although borrowers seeking loans too large or risky for Fannie and Freddie may pay higher rates (see story).

While only 62 percent of those surveyed said they think mortgage rates are lower than a year ago, 72 percent said rates are affordable or very affordable.

Nevertheless, half of those looking to buy in the next six months said they were worried about coming up with enough money for a down payment, and 68 percent said getting an affordable mortgage was a concer. 

Concerns about the economy were also a factor, with 90 percent saying they were worried or very worried. But 78 percent think it's a good time to buy.

Fifty-eight percent of those looking to buy in the next six months said they worried they would no longer be able to pay their mortgage if they lost their jobs or were forced to take a pay cut.

"Our research shows that while consumers still have concerns about the future of the economy, many are actively considering their options as we move into the spring selling season," said Tom Kunz, Century 21 Real Estate president and CEO, in a press release summarizing the survey's results.

Homebuyers who have a stable job history of at least two years, solid credit (620 and above) and down-payment money as minimal as 3.5 percent on FHA-guaranteed loans "are well positioned to secure a mortgage" today, said Marshall Gayden, senior vice president of Century 21 Mortgage.

Quality schools and proximity to work and stores, restaurants and parks are often said to be key considerations for buyers, though those factors were less likely to be rated "very important" by those surveyed than a home's price and condition, the safety of the neighborhood, property taxes, and yard size.

Nearly six in 10 potential buyers rated their understanding of the process of buying and selling a home as only "fair" or "poor." But when asked who they would turn to for advice about purchasing or searching for a home, those under 40 were more likely to identify their parents than a real estate agent, spouse, neighbor or coworker.

Most potential first-time buyers said they'd browsed real estate listings (66 percent), talked to friends or family (60 percent), and conducted research online (58 percent).

Real estate company Web sites were identified most often (53 percent of those surveyed) as a source of information when you need advice on purchasing or searching for a home, followed by aggregator sites like Realtor.com, Trulia and Zillow (43 percent), real estate company offices (42 percent), newspaper and magazine articles (38 percent), word of mouth (37 percent), and books on real estate (21 percent).

While many real estate professionals believe newspaper advertising has been providing diminishing returns in recent years, more than half of prospective first-time homebuyers said they turn to or expect to turn to newspapers for listings.

Real estate company Web sites were identified as a top source of information for listings (for-sale properties), at 64 percent, followed by newspapers (55 percent), online classifieds including Craigslist (43 percent), real estate yard signs (42 percent), aggregator Web sites (41 percent), and real estate company offices (39 percent).