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Business - Twentysomethings buying more homes
01/16/2003
CHICAGO (AP) -- Record-low interest rates are prompting people in their
early 20s to do something they hadn't thought possible at their age: buy
a home.
Erin Engelke was a fresh-faced college graduate when she and her husband Jason bought their first home, a town house in Edmond, Okla. They've since bought another three-bedroom house and rent the town house to college students. She's 24. He's 25.
Jeff Lischett, 23, used his signing bonus and a salary advance from Kraft Foods to fill out the down payment he'd started saving while living with his dad after college graduation. He'll be moving into his new two-bedroom, two-bath town house in suburban Chicago later this month.''
Most people my age realize that renting is silly when you think about it,'' says Lischett who got a 5 percent interest rate that makes his monthly mortgage payments comparable to -- or even less than -- he would have paid in rent.
''And living at home for a couple years to save money isn't as frowned upon anymore,'' he says. ''You're no longer the loser living in the basement.''
While Lischett was able to come up with his own 10 percent down payment, many buyers his age are getting help from parents or grandparents. Still others are taking advantage of deals -- prompted by a hot buying market -- for 5 percent down payments or even those that require no money down.
The current climate is making it possible for some young people to buy ''even in New York City,'' says Ellen Bitton, CEO of Park Avenue Mortgage Group Inc., a lender that does business in many states. She says most homebuyers 25 and younger are seeking loans in the ballpark of $130,000 to $350,000.
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Real estate industry statistics show the impact. The median age of the first-time homebuyer has been dropping -- from age 32 in 1999 to 31 in 2001, according to a survey done every other year by the National Association of Realtors. And transactions from the under-25 crowd rose from 305,192 in 1999 to 321,136 two years later. (Overall, there were 2.85 million first-time buyer transactions in 1999 and 3.09 million in 2001.) Though it's creating headaches for apartment landlords in some cities -- who rely on twentysomethings for rent -- experts say financially stable young people who buy property have an unprecedented opportunity -- to get loans at record-low rates and to begin building equity in a home earlier than some of their parents did. ''Homes for these young families are not just a place for them to lay their heads at night. These are little prosperity factories,'' says Scott Syphax, president and CEO of the Nehemiah Corporation of California, a nonprofit organization that provides homebuyers with down payment assistance. The trend is causing some real estate agents to target young buyers. A few agents at the RE/MAX real estate firm, for example, host first-time buyer seminars for college students. Other agents say savvy twentysomethings are coming to them. ''They're not going for the flash. They're not going for the fancy cars. They're going for the real estate,'' says Honore Frumentino, a broker with Koenig & Strey GMAC Real Estate in Deerfield, Ill. ©The Morning Journal 2006
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