By Brent Ruffner
Mail | Twitter: @AzNewsmedia

Buying a home can be a daunting task these days. Higher interest rates and a lack of supply aren’t the most ideal conditions for first-time homebuyers.

Those needing to prove increased creditworthiness in a Phoenix market come as a slump in supply is occurring, according to local experts.

The Valley has the lowest number of new listings in “at least” 23 years, said Tina Tamboer, a housing analyst with the Cromford Report.

Both price points and interest rates are high, which will have the biggest impact on first-time buyers.

“I know it’s tough out there right now,” said Realtor Jan Leighton.

First-time homebuyers can apply for help such as down payment assistance programs and Veterans Affairs loans for those who have served in the military, Leighton said. Or, those homebuyers might have to set their sights lower — going from trying to buy a single-family home to a smaller option of a condominium.

Gilbert-based Barrett Financial Group has bond programs where lenders work with nonprofi ts to help first-time buyers finance the 3% or 3.5% down needed to qualify, said Frank Apodaca, a lender with Barrett.

In some cases, the mortgage would be financed at 97% and then the 3% would come from a second mortgage. Or, the 3% could be forgiven by the nonprofit altogether.

Nationally, lower monthly premiums on mortgage insurance by Fannie May and Freddie Mac certainly will help first-time homebuyers. Mortgage insurance is a program that requires buyers who do not put at least 20% down on their home when purchasing to pay extra per month to cover any possible default on the loan.

Have lower mortgage insurance rates through government programs could equal savings of $100 to $125 per month, Apodaca said.

“That’s important,” Apodaca said. “That’s not a stick in the eye.”

Mortgage rates for homebuyers looking at something like 3% down were running about 5.375% this week, according to Bankrate.com. That is down from recent highs that broached 7%, but well above pre-pandemic levels that were in the 3.5% range.

While mortgage rates are easing, first-time buyers find themselves in a similar position to pre-pandemic buyers with a shortage of homes on the market. Vanguard buying up single-family homes in 2020 helped gobble up inventory and leave some first-time homebuyers with slim pickings, Apodaca said.

In some cases, companies paid cash and tens of thousands over the asking price, he said. “When you are a first- time homebuyer, how do you compete with that?” Apodaca said. “You can’t.”

The best way to combat that? Jump in the game, he said. The benefit of buying, Apodaca said, is that buyers can combat inflation and know what their payment will be each month. Those who end up on fixed incomes might find themselves in trouble if rents keep increasing, he added.

Lizy Hoeffer, a lender at CrossCountry Mortgage, echoes those sentiments on a lack of housing available for first-time buyers. The Valley underbuilt single- family homes leading up to the pandemic, and regular residents are having to compete with corporate America.

“It’s crazy we are allowing corporate America to buy up (all the inventory),” Hoeffer said.

Last month, the Associated Press reported “existing U.S. home sales fell 2.4% last month from February to a seasonally adjusted annual rate of 4.44 million,” the National Association of Realtors said in the story. That’s below the 4.5 million home sales economists were expecting, the AP reported.

Sales slumped 22% compared with March last year, the AP story said. The annual drop was steepest in markets across the Western part of the country, where sales sank more than 30% from a year ago, according to the AP.

While median home prices slid nationally 0.9% to $375,700, the AP reported there remained a dearth of homes on market which continued to see bidding wars in many markets for the most affordable of homes.

If inventory wasn’t enough of a problem, stricter banking and lending regulations following the housing crash in 2008 have ensnared buyers. Some first-time homebuyers must pay down debt in order to qualify for a mortgage, said Steven Hensley, housing analyst at Zonda.

“For example, paying off an auto loan before applying for a mortgage,” Hensley said. “Mortgage requirements are the same. (You) must prove you have a job and adequate income to afford the monthly payment.”

Millions of people across the U.S. are sitting on the sidelines because some homes have become unaffordable, Hoeffer said. She said the market has seen “the highest percentage” of cash buyers in the last couple of years.

“Affordability is definitely one of the biggest issues,” she said.

Brent Ruffner
Lead News Reporter | Daily Independent
@AzNewsmedia

BRuffner@iniusa.org

Journalism has fascinated Brent Ruffner since junior high school.

Since 2001, his stories have been published in newspapers from the Albuquerque to the Arizona and he has always had a knack for making sure his facts are right and his words are to the point. 

Growing up, Brent watched as sports reporters covered his beloved Phoenix Suns, a team he followed since Charles Barkley first arrived in Phoenix via trade in 1992. Sports reporting was a dream back then.

But after gaining some writing experience, Brent found a love for news instead of covering different types of sports. In 2008, he moved to New Mexico and covered crime, schools and city beats all while holding elected officials accountable. 

He covered stories that ranged from a DEA drug bust gone bad to an award-winning story on school lunches. 

In Arizona, Brent was a freelance writer who covered everything from the importance of citrus in the state to Esteban owning a store in downtown Prescott. 

Brent is a 2007 graduate of the Walter Cronkite School of Journalism and Mass Communication at Arizona State University.