Scary Statistic - Almost Half of First Time Homebuyers Do No Money Down
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This could be a ominous sign for the real estate and banking industries. How can we allow people to buy homes with no money down. This will lead to many walking away from the homes the minute they get upside down in them.
As housing prices soared last year, an eye-popping 43 percent of first-time home buyers purchased their homes with no-money-down loans, according to a study released Tuesday by the National Association of Realtors.
The trend is potentially ominous. The real estate market is cooling in some areas, and rates on adjustable-rate loans are creeping up. As a result, some no-money-down buyers could owe more than their homes are worth.
The median first-time home buyer scraped together a down payment of only 2 percent on a $150,000 home in 2005, the NAR found. via thedesertsun.com
My bet, this is the time to take the seminar on buying up foreclosures as many will be hitting the market place in the near future in some markets.
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Comment by Brandy on 21 January 2006:
Sell paying Buyer closing cost are common in my mid-west area. Many times the buyer will actually be given a check at closing without ever having invested a dime. Main reason are the young 2 income family that doesen’t budget for savings. I am a sales agent and do wonder what the future will bring with these homes. If the buyers income rises over time and the payment is in line for them now they should be ok. Equity is another thing. It will take time to “trade up”.