Although interest rates have been lower many lenders have tightened the standards required to obtain a home loan and that has presented yet another challenge for those seeking to buy their first home. As if all this wasn’t enough, short sales and foreclosures were being quickly bought up by savvy investors who were often paying cash for the distressed properties (as high as 50% by some estimates). This further limited the options for 1st time home buyers and even then offering a substantial down payment for a short sale is often the key to having your offer approved by the bank; something that most recent grads. simply cannot afford to do.
Due to below average housing starts homebuilders have been building fewer homes than in the past. The current average is about 1.1 million per year but the national average is usually around 1.5 million. That’s a big difference and the effect on the economy is noticeable.