Buying a first home – WSJ

By RACHEL LOUISE ENSIGN – Wall Street Journal

Last fall, Gretchen Steinmiller Torres and her husband, Dustin, bought their first place, a $204,000, four-bedroom, 2½-bath house in the suburbs of Columbus, Ohio — even though they didn’t have immediate plans to use much of the space.

“We have a baby room in our house with no baby,” says Ms. Torres, 29 years old, adding that the newly constructed home is in a good school district. Now they just have to grow into it.

Forget the starter home.

With housing prices stagnant and still falling in many parts of the country, and interest rates still relatively low, younger first-time buyers are finding that they can afford more house than they would have a few years ago. And they don’t have the complication of having to unload an existing home that also has dropped in value before they can buy a new one.

But the current market also presents some challenges for younger buyers. Many lenders are requiring higher credit scores and larger down payments. Mortgages insured by the Federal Housing Administration, a popular option for first-time buyers, are getting higher fees. And buyers should prepare to stay put for a while since home prices aren’t expected to rebound any time soon.

The median existing-home price was $158,800 in January, down 3.7% from a year earlier and down 24.7% from January 2007, according to the National Association of Realtors.

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