First-time homebuyers driving the market now
By Andrew Kay
This spring, a lot of elements are converging to put first-time homebuyers in the driver's seat. In a season that is, by tradition, the most popular time to purchase a new home, these buyers are suddenly being seen as the key to a market turnaround.
Among the compelling factors working to their advantage are the 50-year low in mortgage interest rates, an ,abundance of inventory, highly motivated sellers and prices that are substantially lower than they were last year at this time.
Capping these factors is the Homebuyer's 'Tax Credit-part of the American Recovery and Reinvestment Act signed into law in mid-February. This stimulus provision provides for a tax credit of up to $8,000 for first-time homebuyers within the income threshold who purchase a principal residence on or after January 1, 2009 and before December 1, 2009. The credit does not require repayment as long as the buyer occupies the home for three years.
"Now is an enviable time to be a first-time homebuyer," says Steven Spinola, president of the Real Estate Board of New York (REBNY). "If these homebuyers bring realistic expectations to the market and view their home as a place to live, not as a can't-miss investment opportunity, they won't be disappointed in buying their first home."
New buyers are capitalizing on this unique opportunity. Up to 45 percent of homes being purchased today are by those entering the market for the first time, according to an April report by the National Association of Realtors (NAR). Unencumbered by having to sell an existing home, these first-time buyers are fueling the sale of lower-priced properties.
The conforming loans they are seeking (up to $417,000 for single-family homes and $729.500 for those In high-cost areas) are the ones that are easier to obtain. "The market heals from the bottom up," says Dottie Herman, president and CEO of Prudential Douglas ElIiman. By absorbing much of the excess Inventory of homes that is affecting values nationwide, first-time homebuyers represent a critical demographic
"Whether they're seeking a $400,000 or a $1 million property, first-time buyers are savvy enough to know that they can now get their homes for prices they couldn't have afforded a year ago," she adds.
According to Herman, all the recent incentives support a basic desire. The current generation of first-time buyers still wants to own, their parents - the baby boomers - tended to own their homes and they identify with that."
Ronnie Laiken, president of Coldwell Banker Residential Brokerage in New Jersey and Rockland County, New York, expands on this: "Why rent when you have such home affordability? With such low interest rates, your first home can, in some cases, be your move-up home. This is a unique window of opportunity."
In addition to government incentives, "Coldwell Banker Home Loans offers a first-time homebuyer program and continues to offer mortgage products that have stood the test of time," adds Laiken. "I encourage buyers who may already be preapproved get a second opinion. With some rates below five percent, it is too good to pass up."
"This market presents wonderful opportunities tor first-time homebuyers, and developers are encouraging buyers with incentives that make this an ideal time to purchase your first home," says Elizabeth Stribling, president of Stribling & Associates. "We believe home prices and supply favor those looking for good value in virtually every neighborhood of Manhattan and Brooklyn."
According to Kelly Kennedy Mack, president of Corcoran Sunshine Marketing Group, "First-time homebuyers in New York are a particularly diverse group, entering the marketplace from all life stages."
"For example, on the Upper East Side, buyers are often looking to trade up from rentals and gain additional space at attractive prices. Many of our East Side properties have price' points below $1 million, including Manhattan House [200 East 66th Street] and 515 East 72nd Street [Miraval Living].'"
According to Mack, rent-to-own programs can be the perfect stepping stone. The condominium 75 Wall has introduced a program that allows buyers to apply a full year of rent toward the purchase of a home. The Argyle in Park Slope qualifies for a discount on mortgage rates through a program called CRA (Community Reinvestment Act), which can lower today's historically low rates even further - up to a third of a percent. Many first-time buyers are eligible.
Green features improve quality-of-life and reduce utility bills. First time buyers who wish to experience an environmentally friendly lifestyle in a condo with high-end finishes and amenities are gravitating toward The Visionaire in Battery Park City. An abundance of sustainable innovations have earned The Visionaire Platinum LEED certification from the U.S. Green Building Council. These include a high-efficiency fresh air ventilation and filtration system and building-integrated solar panels. Thirty-five percent of the electric energy is supplied through wind-generated power. Natural gas powers the residential cooling systems and a water treatment system in the building recycles water and provides make-up water for the HVAC-system cooling tower.
Designed by Rafael Pelli of Pelli Clark Pelli Architects, the 35-story tower features a distinctive curved glass facade, showcasing generous river views. The 251 studio to three bedroom residences start at $690,000.
Developers are getting the attention of prospective buyers in more aggressive new ways. The Web site for the Hudson Hill Condominium, a new 10 story boutique condo at 462 West 58th Street, between 9th and 10th Avenues, features a video message from Kenneth Horn, president of Alchemy Properties, the developer. Filmed at a recent open house, Horn introduces new price reductions of up to 30 percent for the next 25 buyers to sign a contract.
With its strategic Midtown West location, a few blocks from Lincoln Center, Central Park and the Upper West Side-the condominium is attracting younger buyers, many of whom are bringing their parents to the open houses. The condo has 67 one-, two- and three-bedroom layouts, priced from $693,000.
Outside Manhattan, these young, first time buyers are gravitating to Jersey City's waterfront district and Hoboken's urban setting-both, just a short commute from Manhattan by mass transit. The appeal of resort-like amenities is drawing them to three new developments from Metro Homes, LLC.
At Gull's Cove, a high-rise development in downtown Jersey City, over two-thirds of the 323 residences are sold, with prices starting at $299,000. In addition to a landscaped plaza with putting green, fitness center and indoor parking, a Light Rail station located at Gull's Cove's doorstep and a commuter ferry and PATH station within walking distance are a big part of the condominium's appeal.
Just north in Hoboken, next to the Ninth Street Light Rail Station is Metrostop, an 11-story building that capitalizes on the city's eclectic vibe, while offering views of the Manhattan skyline. The one- and two-bedroom residences ranging from 812 to 1,436 square feet are priced from the high-$300,000s.
Also on the Jersey City waterfront, which is increasingly referred to as Wall Street West, a new 42-story condominium, Crystal Point, is being tailored to younger first-time buyers by its marketing and exclusive sales agent, The Marketing Directors, Inc. The building offers water views in every residence, resort-caliber amenities, free onsite parking and proximity to two PATH trains for quick access to Manhattan. Grand Opening prices for the condo's 262 one-, two and three-bedroom units start in the mid $400,000s.
"We've added even more value to the equation by establishing a close relationship with various lending institutions that allows purchasers to receive amazingly low interest rates and offers the ability to lock in at any time between signing their contract and closing," says the developer, Brian Fisher of Fisher Development Associates.
Another Jersey City condominium that will have particular appeal for first-time buyers is Canco Lofts, an adaptive reuse of the landmark buildings that were formerly an American Can Company factory where the tab-top beer can was invented. With soaring 14-foot ceilings, panoramic windows and dramatic concrete columns, the loft residences have been designed to provide an abundance of light and air. Amenities at Canco Lofts include a lounge and billiards room with flat-panel televisions, half basketball court and fitness center, 20-seat screening room, virtual golf and a dog park. There is also a full-time concierge and onsite parking garage.
First-time buyers are doing their homework. "We know that they do so much research on the Internet because they come prepared with questions," says Susan Hunter, vice-president and director of marketing for Lois Schneider Realtors in Summit, New Jersey. On Sunday, May 17, the brokerage is holding a special seminar for first-time buyers with a panel of experts, including an attorney, loan representative, inspector and local architect. "There's a lot of uncertainty out there," Hunter adds, pointing out that the solid New Jersey communities of Summit, Chatham and Short Hills are ideal places to invest in a home. "The houses that are selling well are under $900,000 and we have inventory, including condos, from the $300,000s on up. For couples moving out from the city with young families, you can't do better."
Developers are courting first-time buyers directly with attractive rates and terms. In East Meadow, Long Island, Westwood Homes is building four new houses in the Estates at Salisbury enclave for early fall occupancy. "We are offering a four percent mortgage for 30 years," says developer Bob Preston, who adds that buyers will enjoy "a substantial savings on the life of the mortgage." He estimates that, based on the price of $699,900, the loan will cost approximately $3,671 a month to carry and points out that "the upkeep will be cheaper than rent."
Buyers can choose from four different models, all of which have four bedrooms and will be in move-in condition, fully landscaped and appointed with Energy Star appliances. Preston adds that those who qualify can take advantage of a 10-percent down-payment option.
In Newburgh, New York, Pulte Homes' Brighton Green town home Community invites buyers to take advantage of FHA financing. With 51-percent occupancy, the condominium is qualified to offer mortgages with as little as 3.5 percent as a down payment. The three bedroom homes are priced from the low $300,000s.
"By pairing the $8,000 tax credit with the prices at Brighton Green, which we've~ adjusted to meet market needs, first-time buyers are truly receiving a deal of historic proportions," says Paul Schneier, president of Pulte's Metro NY/NJ Division. "And with FHA-approved financing, down payments at Brighton Green are manageable for just about any prospective buyer."
Real estate auctions of distressed properties have gained appeal and popularity among first-time home buyers. REDC, the Country's leading real estate auction firm reports that consumers throughout the nation are purchasing foreclosed homes at its auctions at astoundingly low prices, many for 50 to 60 percent less than the previous high value.
Banks and lenders have ordered more than 550 foreclosed homes in New York, New Jersey, Pennsylvania, Massachusetts, New Hampshire, Rhode Island and Connecticut to be sold at the REDC auction on June 7th and 8th.
"There is a fantastic selection of homes that must be sold," says Jeffrey Frieden, CEO of REDC. "The lenders and banks are very motivated to sell these properties to homebuyers and investors, so expect rock-bottom auction prices."
Bidders may register for the auction online any time and starting bids may begin as low as $500.
Whether you are just out of college and purchasing your first studio, or graduating from a rental in the city to a house near good schools in the suburbs, the opportunities for financially capable first-time buyers are too good to miss.
"If you believe in real estate," says Dottie Herman, "this is the time." |
