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Wanted: First-time homebuyers, willing to turn the market around

This article first appeared in the St. Louis Beacon, Jan. 5, 2009 - Opportunity is knocking, say area Realtors who are pinning their hopes on first-time homebuyers willing to take advantage of bargain prices, low-interest mortgages and a temporary federal tax credit.

"That first-time buyer really needs to come out," said St. Louis Realtor Marty Ribaudo of RE/MAX Associates Plus, echoing a sentiment shared by the region's housing industry that it's going to take motivated first-time homebuyers to jumpstart the slumping market.

But Ribaudo acknowledged that even with mortgage interest rates of 5 percent or lower and a surplus of affordable properties to choose from, these sought-after first-time buyers aren't stepping forward in large numbers.

"We think that many of them are scared that possibly their jobs are not as secure as they might have thought. And they're thinking money is not available to them, which is just not true. Money is available," Ribaudo said.

Realtors say they've been instructing first-time buyers about a temporary tax credit included in the Housing and Economic Recovery Act passed by Congress last summer. The temporary tax credit covers 10 percent of a home's purchase price, up to a maximum of $7,500.

Ribaudo said that first-time buyers could, in effect, "bump up" the market, enabling current homeowners to move up into larger, more expensive homes.

Realtor Merry Dahms of RE/MAX, who sells homes in St. Louis city, calls this the best buyers' market she has seen in her 22-year career.

"Loan money is definitely available," Dahms said. "There has been a lot of press that has scared people into thinking that you can't get a loan. If you have a job and a reasonable credit rating, the money is there, and you can get into a house with a fairly low down payment."

Although no-down-payment loans were swept away in the foreclosure crisis, homebuyers with jobs and good credit scores can still get loans with down payments of just 3 to 3.5 percent, she said.

"Obviously, the real issue is whether people have jobs," Dahms added.

Christa Mulchek, a Realtor with Prudential Select Properties, said buyers are also taking their time because they are bargain hunting, which means that sellers must be realistic and motivated.

"If you want to sell your home, you have to price it a lot lower than you thought you were going to have to -- and at a lot less than you would have gotten a year ago," Mulchek said.

Homes are on the market longer while buyers wait to see if prices will go lower, said Mulchek, who believes a turnaround won't begin until consumers have confidence that they are going to have jobs and that the market has stabilized.

"Buyers are still thinking that we haven't reached the bottom yet, that if I wait another month, I can get this house for less," she said.

Dahms said that established Realtors with good referral sources are still selling homes.

"Nobody is raving about the market, but I don't hear the more established agents crying about it, either," said Dahms, who added that her phone has started ringing more in recent days, despite the holidays.

"There seems to be people out there looking and asking questions -- which says to me there are people looking to make a buy. Now whether they're looking to make a steal or not is another question," she said.

Nancy Milton of Coldwell Banker Brown in Edwardsville said that her business picked up after November's presidential election, as buyers shifted their focus back to their personal circumstances.

"We are actually seeing a lot of movement in first-time buyers," she said. "And I think that the low interest rates are really making them sit up and take notice that this is a great time for them to move from a rental situation to a home of their own."

Milton said the buyers she has worked with recognize that their personal financial situations are better than the gloomy national economic news might have them believe.

"People are being sensible about what they can afford," she said. "These are very sensible people who don't want debt to rule their lives. They're looking for great deals, but they're being very sensible about it."

The Realtors say that homeowners and buyers alike are adjusting to a new housing market that no longer promises ever-increasing prices and quick profits.

"To some extent, a home is an investment, but it is not your ATM," Dahms said. "And I think people got used to assuming the value of the house would keep going up so they could keep taking money back out of it. You're not going to just buy and flip."

Ribaudo advises buyers to familiarize themselves with the current market and the opportunities available to them.

"If they buy now, they should make money," he said, pointing out that waiting for the bottom of a market may mean missing it.

"I've seen this before," Ribaudo said. "When the interest rates start clicking up and the housing values start stabilizing and going up a little, then people start buying, because, 'Oh, wow, it must be the end.' "

Missouri Home sales

November 2007 vs. November 2008

St. Louis County

Homes sold   Median SalePrice

2007     1,009           $156,000

2008         798           $126,250

St. Louis City

Homes sold   Median SalePrice

2007      312             $125,000

2008     227             $ 69,000

St. Charles County

Homes sold   Median SalePrice

2007     364             $180,000

2008     256             $172,750

Source: St. Louis Association of Realtors

Illinois home sales

2007 vs. 2008

(Bond, Calhoun, Fayette, Jersey, Macoupin, Madison, Monroeand Montgomery counties) 


Listings  - 5,048

Average  sale price - $125,663

Average list price - $130,706

Median sale price - $105,000

Median list price - $109,900

Days on the market   - 117   


Listings  - 4,089

Average  sale price - $120,686

Average list price - $126,865

Median sale price - $100,000

Median list price - $109,500

Days on the market   - 128   

Source: Greater Gateway Association of Realtors

Mary Delach Leonard is a veteran journalist who joined the St. Louis Beacon staff in April 2008 after a 17-year career at the St. Louis Post-Dispatch, where she was a reporter and an editor in the features section. Her work has been cited for awards by the Missouri Associated Press Managing Editors, the Missouri Press Association and the Illinois Press Association. In 2010, the Bar Association of Metropolitan St. Louis honored her with a Spirit of Justice Award in recognition of her work on the housing crisis. Leonard began her newspaper career at the Belleville News-Democrat after earning a degree in mass communications from Southern Illinois University-Edwardsville, where she now serves as an adjunct faculty member. She is partial to pomeranians and Cardinals.

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