Newspaper article THE JOURNAL RECORD

Young Couples Encouraged by Affordability of Housing / but, Higher Downpayments Await

Newspaper article THE JOURNAL RECORD

Young Couples Encouraged by Affordability of Housing / but, Higher Downpayments Await

Article excerpt

NEW YORK - Encouraged by studies showing housing affordability has improved, a result of rising incomes and lower interest rates, many young couples are seeking to buy their first houses this spring.

``Now is as good a time as ever to buy a home,'' says Nestor R. Weigand, Jr., president of the National Association of Realtors, because ``conditions over the last few months are the best of the decade.''

He points to an affordability reading of 113, meaning a family earning the median income of $31,384 had 113 percent of the income needed to qualify for a conventional 80 percent loan on an existing median-price home of $88,300.

That's one point of view, and it is well-supported by the evidence. However, it applies only to those who manage to come up with the 20 percent down payment, which in some parts of the country can mean a lot of cash.

There's another viewpoint: No matter what the affordability measures say, it is still going to be difficult for most first-time buyers - those who seek to put down only 10 percent or 15 percent - to get the house of their choice.

Those who say that have been observing a growing phenomenon, a tendency for mortgage lenders to seek higher downpayments from their customers, thus obliterating the good news coming from housing and real estate people.

Because of the surge in housing prices over the past half-decade, two big obstacles face first-time buyers. First, they must have sufficient money for the down payment; secondly, they must be able to afford carrying costs.

While two incomes help solve the second of these challenges, these incomes might have very little impact on the problem, that of amassing the down payment. Young people have a tough time saving, for reasons well known to everybody.

Recognizing this, the market responded with extremely low down payments, made possible in part by mortgage insurance that reduced the lender's risk. …

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