Young buyers face challenges moving into first homes

Young buyers face challenges when financing homes

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Ashleigh Hamilton wasn’t immediately sold when she first saw the home in Harlem she’d end up buying.

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Blake and Ashleigh Hamilton, both 23, are in the process of renovating the Harlem home they just purchased from a foreclosure. Like many other millennials, the couple faced financing challenges, but they are excited to move into the home with their six-month-old son, Brycen.  JENNA MARTIN/STAFF
Blake and Ashleigh Hamilton, both 23, are in the process of renovating the Harlem home they just purchased from a foreclosure. Like many other millennials, the couple faced financing challenges, but they are excited to move into the home with their six-month-old son, Brycen.

At first glance, the 23-year-old only saw the hard work that would go into renovating the one-story 1,700-square-foot home in rural Harlem, but she soon couldn’t deny the property’s attributes: a wrap-around front porch, nearly three acres of land and the reward that comes with making the house her family’s home.

“I am kind of close-minded when it comes to that, so when I look at a house, I want it to be like what I pictured,” she said. “My husband convinced me to go for this one.”

Hamilton and her husband, Blake, found financing to be the most arduous part of the home-purchasing process. Because her husband holds a temp job, the loan had to be solely in Hamilton’s name, and that meant only qualifying for $75,000.

The Hamiltons rented for a year and a half before they found a house in their price range. Hamilton ended up paying $54,000 for the couple’s first home, bought from foreclosure.

“We looked probably for a solid year before we found the house for us,” Ashleigh Hamilton said. “Not just because we couldn’t find a house that we liked but because of the money situation. We had to find something that was within our budget.”

The Hamiltons, both 23, saw the same struggles that many young adults face today.

The generation of adult millennials, ranging in age from 18 to 33, represents the largest share of recent home buyers at 31 percent, but they still must jump several hurdles as they look to buy their first homes, according to a generational trends study conducted in March by the National Association of Realtors.

As millennials, widely classified as people born after 1980, graduate from college and move into the workforce, they are entering the peak time for first-time home purchases. However, stringent credit restrictions, a limited housing inventory, rising prices and an all-time high student loan debt are colliding to create the perfect storm of a tumultuous home buying climate.

“They have this debt,” said Jessica Lautz, NAR’s director of member and consumer survey research. “They’re having a hard time saving because they are paying a larger portion of their income toward their rent. In some cases, they could be pushed out of the home-buying market because prices are now rising.”

A Pew Research Center analysis further found that the percentage of young adults still living at home last year was 34 percent, down from 35 percent in 2012, when 21.6 million young people stayed within their parents’ homes. The report showed this to be highest share of young adults living at home within the last 40 years, including the Great Recession of 2007.

“We did find that they’re the most optimistic of all the generations and that it’s going to be a good financial investment,” Lautz said. “I do think that while they are having these difficulties, perhaps saving for a down payment and getting into that first home, they are excited about it.”

Though the Hamiltons are temporarily back at home with Ashleigh’s parents as they renovate their three-bedroom, two-bathroom fixer-upper, the couple is happy about the purchase.

“We have a six-month old, so we were ready to settle down and have our own house,” Ashleigh Hamilton said. “But, also, we wanted to be putting money into something that we’re going to own instead of just a rental property.”

Brandi Ledford, an agent with Better Homes & Gardens Real Estate, said the biggest issue she has when working with her younger clients is stressing to them the importance of good credit. In April alone, Ledford said she’s had four potential home buyers who couldn’t get approval for a mortgage loan.

“Some by just a couple of points or some because of credit cards,” said Ledford, whose clientele consists mostly of young first-time buyers. “They couldn’t get the amount they wanted to get the type of house that they’re having to rent.”

The local housing inventory also is becoming increasingly limited, said Meybohm realtor Andy Higgins, and young buyers are seeing difficulties not only in securing financing but also in finding a property at their price point and avoiding bidding wars.

“Our lower-end market, or our first-time buyer market, has never been that bad,” Higgins said. “Lately, it’s been extremely competitive and inventory is getting bought up very quickly.”

When 24-year-old Calvin Captville recently put an offer on a three-bedroom, 2½-bathroom home he just bought in Augusta, he wasn’t the only interested party.

There was another offer on the 1,600-square-foot house in the Arbor Creek subdivision, but Captville won in the end. He paid $140,000 for the property, initially listed at $139,000.

A manufacturing engineer for E-Z-GO, Captville moved last June to Augusta from Louisiana for work. He’s since been renting an apartment off Perimeter Parkway.

“I knew I didn’t want to rent for two or three years,” he said. “I wanted to invest my money in some way.”

Captville did, however, have a slightly altered idea of what his first home would like. With his price range capped at $180,000, Captville wanted a newly-built home in a central location.

The home Captville eventually chose is more modest, though brimming with upgrades, than Captville he pictured and was built in 1989. He called it a “diamond in the rough.”

“When I initially started, I was looking at only new homes,” he said. “I wanted something brand new. I noticed what I wanted was in Evans and Grovetown. Evans was a little bit out of my price range. Grovetown was in my price range, but it was a little further out. Before we found this house, it was very challenging.”

Captville’s high expectations for a first home are not uncommon for his age group, said Edwin Douglass, an agent with Blanchard and Calhoun.

“The younger folks, they still want all the fancy stuff, and they realize that it’s very difficult to come by in a first home,” he said. “I do think they’re more conscious. They don’t have to have it whereas in years past, before the recession, people just had to have all the bells and whistles. Now, they’re trying to be a bit more frugal.”


• Largest share of recent home buyers at 31 percent.

• Largest share of first-time buyers at 76 percent.

• Buyers median age was 29 with income of $73,600.

• Purchased, on average, 1,800-square-foot home costing $180,000.

• 62 percent previously rented an apartment or house; 20 percent lived with parents, relatives or friends.

• Plan to stay in home for 10 years.

• 97 percent financed home purchase.

• Relied on savings for down payment.

• Most likely to look online for information during process.

• More than 50 percent used a mobile device during home search.

• Referred to agent through friend, neighbor or relative.

Source: National Association of Realtors

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nocnoc 04/27/14 - 03:51 pm
It just isn't the young 1st time buyers

We have purchase over 11 properties in the last 30 years.
We are now in the process of purchasing a home and the process is
so Anal-retentive it has become a joke.

Yes fixes were needed,to correct some loop holes that allowed abuse.

But the biggest abuser involved in Home Loans has also been the
LARGEST originator of defaulted loans.

Yes the FEDERAL Government's policy of special loans and rules to
place people in homes they can't afford, and cannot afford to maintain.

In our case with a score in the mid 7##'s and putting down 30+%. We have found they want so much nit-picking, check the block data, that it has become ridiculous.

We got an inquiry back from the Credit Underwriter asking us why we had a our Credit History reviewed in the last 60 days.

The wife kept me from crawling thru the internet to explain it was

It has reached the point that Wife and I have discussed to the forbidden subject:

Staying another 2 years in ARC.

Cut back on spending and save up the remainder,
build what we want, where we want it and then
say screw the Real Estate market and Banks.

Little Lamb
Little Lamb 04/27/14 - 04:32 pm
Young, 1st time

Let's admit it folks — young and 1st-time buyers have always faced challenges moving into their first home. There is nothing new here.

burninater 04/27/14 - 05:15 pm
LL, this USA Today article

LL, this USA Today article has empirical data from industry specialists demonstrating real ways first-time homebuyers have a harder time now.

Simply having the ability to say "Things were always hard" is no excuse to deny and ignore substantive changes in real estate markets.

Little Lamb
Little Lamb 04/27/14 - 06:53 pm
Too Easy

Thank you, Burninater, for the link. I read most of it and found mostly the standard pablum served up by the popular economic press month in and month out. Not much real meat there.

Here is a quote I found interesting from the link:

New FHA home loans in the last three months of 2012 went to borrowers with an average credit score of 696 vs. less than 660 in 2007 and 2008, FHA data shows.

You see, when credit is too easy, like it was in 2006, 2007, and 2008 – you get people qualifying for loans that have no business buying houses.

Renting is the way to go until you've got a good cushion in savings and a steady, solid, and upper middle class income. Buying a house should be for dwelling only. If these 1st time buyers think a house is an investment, they've got another think coming. A house is a money pit. It's not as bad an investment as a boat, but it's a similar idea.

jimmymac 04/27/14 - 06:56 pm

When I purchased my first home I had to put down 20% to qualify for a conventional loan. I saved until I had enough money and it wasn't easy. Too many people feel that they're entitled to a home even without the means to pay for what they want. Rent until you can afford to buy and then get what you can afford.

corgimom 04/28/14 - 12:39 pm
This was predicted and was

This was predicted and was coming. Real purchasing power has declined since 1973, why did nobody think that this was ever going to happen?

What LL said- a home is one gigantic money pit, the mortgage is just the start. Home repairs now cost a fortune, and they always come. Every single thing in a house eventually breaks or wears out.

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