First-Time Home Buyers Benefit from Recent Market Trends - Is It Time to Buy My First Home?

Reblogger Michelle Silies
Real Estate Broker/Owner with PREA Signature Realty -

Original content by Ryan Shaughnessy


Recently, a first-time home buyer asked "Is now the time to buy my first home?"  Well, there is no simple answer to this complex question.  Real estate professionals aren't necessarily the best equipped to predict future economic conditions.  However, real estate professionals do monitor current trends as well as historical trends in local, regional, and national real estate markets


Presently, there are three key national trends which provide support for the position that now is the time to buy:

  • Housing Affordability Index:  The National Association of Home Builders recently released its Housing Opportunity Index which showed that 72.3% of all new and existing homes homes sold in the second quarter of 2009 were affordable to families earning the national median income of $64,000 using standard underwriting criteria.  Compared to 2008, this represents a strong positive change from 55% in the second quarter of 2008 to 72.3% in the second quarter of 2008.   

Housing Affordability Index

  • Interest Rates:  The average interest rate for a fixed 30 year loandipped below 5% in 2009 and is now at historic lows.  Since 2000, interest rates have declined from over 8% to below 5%.  In practical terms, this means that purchasers can afford more home for the same monthly payment.  For example, a purchaser today who borrows $200,000 at a fixed 30 year interest rate of 5% would pay a monthly payment of $1073.  In contrast, a purchaser who borrowed $200,0000 in 2000 at a fixed 30 year interest rate of 8% would have paid a monthly payment of $1467.  Or stated differently, today's purchaser can obtain a $200,000 loan at the same monthly cost as what a purchaser in 2000 would have paid for $165,000 loan.

Fixed Interest Rate Trends

  • National Median Prices: Since 2006, the national median priceshave declined.  In 2009, national median prices appear to have stabilized with a slight increase in the second quarter of 2009.  Now, there is no guarantee that prices will rise in 2010 and beyond. However, it does appear that prices have stabilized and may show a modest increase in 2010.


National Median Prices


The $8,000 federal tax credit for the purchase of new homes by first-time home buyer represents a unique opportunity.  It is especially attractive for young professionals and recent graduates.  Depending on the loan amount, the tax credit could be used to pay between 7 to 20 monthly loan payments for the typical first-time home buyer.  Here are some examples:

  • $75,000 Loan- Monthly Payment $403 - 20 Mortgage Payments
  • $100,000 Loan - Monthly Payment $536 - 15 Mortgage Payments
  • $150,000 Loan - Monthly Payment $806 - 10 Mortgage Payments
  • $200,000 Loan - Monthly Payment $1073 - 7.5 Mortgage Payments

With favorable pricing, historically low interest rates, and the federal tax credit, I can only conclude that NOW is the time to buy for the average first-time home buyer.

INTERESTED IN PURCHASING YOUR FIRST HOME?  Contact Ryan Shaughnessy at PREA Signature Realty at 314-971-4381 or send an e-mail to to discover how easy it can be to purchase your first home.



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PREA Signature Realty is a full service brokerage located at 1709 Park Avenue in the Lafayette Square neighborhood of the City of St. Louis.  PREA Signature proudly serves the following city neighborhoods:  Lafayette Square, Soulard, Benton Park, Benton Park West, Downtown Loft District, Forest Park Southwest, Central West End, Tower Grove East, Tower Grove South, Compton Heights, Shaw, The Hill, Dogtown, Carondelet, Holly Hills, St. Louis Hills, Dutchtown, and the Other Historic Neighborhoods of the City of Saint Louis, Missouri. 

The opinions expressed herein represent the opinions of the author only and do not reflect the opinions of PREA Signature Realty.  All photos and written content were produced by PREA Signature Realty.  All Rights Reserved - PREA Signature Realty (2009).  This content may not be reproduced or reprinted, except for Active Rain re-blogging, without express written permission of PREA Signature Realty.

For more information, visit our website at or contact Ryan Shaughnessy at 314-971-4381 or send an email to


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Michelle Silies

Broker-Attorney, Your St. Louis Relocation Specialist
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