- The Washington Times - Friday, May 15, 2009

The best April home sales since 2005 - the year the real estate market started to crash - occurred last month in the Washington area.

Existing home sales hit 9,510 in April, which is a 22 percent improvement over sales in April 2008. Home shoppers seem to be responding to the steep drop in home prices that caused sellers to cringe for the past four years. Lower prices and incredibly low mortgage rates have combined to make this the most affordable year for area homebuyers since 2003.

Affordability is a motivator for first-time buyers, who are coming back to the market in a big way. In March, first-time buyers bought 53 percent of the homes sold in the country, according to the National Association of Realtors. In 2006, when home prices peaked, just 36 percent of home sales went to first-time buyers.

To download a PDF of the chart, click here

While it is great to see first-time buyers coming back into the market, we can’t forget that a flood of unqualified first-time buyers contributed to the real estate boom we all regret. Don’t get me wrong - I think it is fantastic when anyone is able to make that big step from renting to buying.

However, the loose lending guidelines we saw during the first half of the decade contributed to an artificial sales boom. That and a glut of sales to real estate investors pushed prices higher than they would have gone otherwise.

As a result, many of those excited first-time buyers have since given their keys back to the bank and are worse off for the experience.

This year is quite different. We can be sincerely excited about first-time buyers coming into the market today. Lenders are taking a much closer look at buyers’ qualifications. Because fixed-rate mortgages are such a good deal now, most of today’s buyers won’t have to worry about rate adjustments in a few years.

Contact Chris Sicks by e-mail ([email protected]).

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