What’s the market like for first-time home buyers?

The answer to that question depends on a few different factors, like your geographic location, whether your region is experiencing a ‘‘seller’s’’ or ‘‘buyer’s’’ market right now, and what the average home sales prices are. Working in your favor are low mortgage interest rates, flexible loan programs, and a variety of homes to select from as ‘‘move up’’ buyers (those moving from starter homes to larger dwellings) also take advantage of low interest rates to upgrade their own living situations. Also in your corner is the fact that the supply of housing—including single-family, multifamily, and manufactured housing—is expected to increase by nearly 2 million units (or 1.6 percent) in 2004 alone, according to a Merrill Lynch & Co. housing report. That means more available properties to purchase, and a better selection of housing options for first-time and experienced home buyers.
Working against the first-time buyer are property appreciation rates that range from zero to a staggering 25 percent nationwide, depending on where you’re located. In some areas, that kind of appreciation has bumped up the prices of starter homes to $75,000 to $150,000 (in some metro areas that number can be much higher) while stoking a great demand for such properties. In metro areas like Houston and Miami, and throughout much of the State of California, such properties are either hard to come by or hard to purchase, since they sell within a day or two of hitting the market.