First-time home buyers have long been an important part of the housing market. And that hasn’t changed today. According to the 2012 Profile of Home Buyers and Sellers from the National Association of Realtors, first-time buyers accounted for 39 percent of all housing sales from July 2011 through June 2012.
"First-time buyers are my primary market at this time," said Laurie Christofano, with Re/Max in the Village, Realtors, in Oak Park. "There has been a new excitement among first-time buyers during the last year. They see that we are at the bottom as far as housing prices go. They understand just how low interest rates are. And they have gotten the message that homeownership in the long-term is a really good thing as far as being able to provide stability for their families, build up equity and fashion a long-term plan for their lives."
Jeff Donnellan, with Re/Max Vision 212 in Chicago, says that he advises first-time buyers to skip the starter-home mentality and instead purchase a larger home within their budget that they can grow into as their needs change.
For instance, instead of buying a two-bedroom condo, first-time buyers might instead choose a single-family home or condo that boasts three bedrooms and two bathrooms. That way, if the buyers should have a baby, they'll have enough room. They won't have to immediately move again.
"I recommend that my first-time buyers find a home that will suit them for a good five years," Donnellan says. "If their lives change, a versatile home is a stable part of their lives instead of a burden. And it usually takes five to seven years for most owners to pay down their mortgage enough, while their home appreciates enough, to be able to sell and make a profit. They won't have to bring money to the closing."
With housing prices still at affordable levels across Chicago and its suburbs, it's easier for first-time buyers to get into those homes that are a bit larger.
James Ludes, an agent with Re/Max Top Properties in Morris, said that today's first-time buyers are more realistic than they were in the past. Ludes has worked in residential real estate for 10 years, so he witnessed the housing boom of the early to mid-2000s.
Back then, first-time buyers frequently stretched their budgets to get into the largest homes possible. Today, though, first-timers are more budget-conscious, looking for homes that will suit their needs and allow for growth but not put them in financial peril.
"At the peak of the market, your first-time buyers were going for the gusto," Ludes siad. "They were looking for everything they could get in a house. If they were pre-approved for a mortgage loan of $240,000, they'd want to see everything up to $250,000. If they could get 3,000 square feet and it was just two people, why not? Today, first-time buyers are being more realistic. They are looking for homes that will serve their needs for the amount of time they plan on staying there."
As with all buyers, first-time buyers are interested in location. But Re/Max Northern Illinois agents say that today's first-time buyers are frequently looking for homes located within walking distance of public transportation, restaurants and shops.
And if buyers can find a home that allows them to ditch their cars? That's even better, adds Donnellan.
"Public transportation is a big key for a home's value. If someone can live close to public transportation and if that person doesn't need a car, that buyer can afford a lot more home. If you don't have to worry about car payments, paying for gas, insurance and all the other costs associated with owning a car, you'll have more money to get the right home."
Christofano says that many of her first-time buyers might not want to live in Chicago, but do want to feel connected to the city. They can do this by living near public transportation.
And if they can buy outside of the city itself, these first-time buyers can afford more home.
Housing prices in the Northern Illinois region are at affordable levels. Interest rates are at historic lows.
At the same time, rents continue to rise. This makes owning a home sometimes more affordable than renting an apartment.
– From local sources