Bargan prices, low interest rates prompting singles to buy homes

Bargain home prices, low interest rates and the now-expired federal tax credit have combined over the last year to change the housing habits of many young singles.

Instead of renting or buying a bachelor or bachelorette "pad" in an urban center, a majority (52 percent) of single men and women are choosing to purchase a single-family home in a suburban area, according to a national online survey conducted by Coldwell Banker Real Estate.

"We are finding the current housing environment to be the ideal marketplace for many people who may have never considered buying a home before," said Diann Patton, the Coldwell Banker Real Estate consumer specialist, in a recent release. "They can afford much more house for their money than they may have been able to in previous years. Many are recognizing that a mortgage payment on a house can actually be the same or less than what they would spend on rent."

Local Realtors say that the national trend also applies to the Chicago area.

Amtrak employee Dan Soursee purchased a ranch home about a mile from the Roselle train station in late April.

A lifelong suburbanite who grew up in Elmhurst and lived with his parents for the past three years to pay off his debts and save a down payment, Soursee said he had no desire to move into Chicago.

"My real estate agent and I looked at a bunch of houses in the $150,000 to $200,000 price range, including bank-owned properties and short sales," Soursee recalled. "But I ended up steering away from them because most of them that we looked at were in pretty rough shape. Many of the bank-owned properties were stripped of their appliances, light fixtures, furnaces, doors and even trim."

The 2,600-square-foot, two-bedroom home he purchased was a conventional sale that had been priced to sell by a motivated seller. Soursee paid $220,000 at closing, which was a bit more than he planned, but "it was absolutely a good deal," he stated.

And after shopping around, he got a 30-year fixed rate mortgage at 5.125 percent.

"I chose this particular house because of the location within a mile of the train station so I can commute downtown to my job. Also, the home was well-maintained, is located in a nice neighborhood with good schools and parks and the open floor plan allows me a lot of flexibility and functionality in how I set up my home," he explained.

"Dan wanted to stay in DuPage County in a location that was close to transportation and would have good resale," recalled Melodie Beaver, his Realtor and former classmate at York High School.

She has been an agent with Coldwell Banker Residential in Naperville since 2005.

The two reconnected on Facebook, where Beaver markets herself as a specialist in short sales and bank-owned properties in the $60,000 to $250,000 price range.

"We looked at homes in Bartlett, Roselle, Wood Dale and Medinah and he was sold on this house because of the proximity to a downtown area and the nice yard," Beaver said.

"Today people can get a single-family home for the price they once would have paid to get a townhouse, so they are choosing the single-family home," she continued.

And the old scenario of young people buying fixer-upper homes is a thing of the past, for the most part, Beaver said, because 99 percent of her buyers have chosen FHA financing (which only requires a 3.5 percent down payment compared to 5 to 10 percent for conventional financing) and in order to qualify, the home must be in very good condition. Even peeling paint can squelch the deal.

That is also why very few choose to pursue a bank-owned property, according to Beaver.

"They want to look at them, but then they walk away from them because many are in bad shape," she explained. "And they walk away from short sales because they don't want to wait the six to nine months it often takes to get an answer from the banks."

Carrie Rorer is another young single who recently became the proud owner of a single-family home.

Last fall the Arlington Heights police officer purchased a three-bedroom, 1,840-square foot split-level home in the village where she works.

"I have lived in Arlington Heights most of my life and up until now lived with my parents so that I could save money," Rorer said.

She admitted she feels very fortunate that she has been patient and now has the means to purchase her own home.

"The current housing market and the low interest rates combined to give me a really good deal on what I bought. The house is very nice inside, is close to my work and is in a good school district," Rorer said. "I plan to live in it for a long time."

She admitted that she always planned to purchase in Arlington Heights, but before the market downturn, that purchase probably would have been a townhouse or condominium. Instead, she was able to buy a single-family home and stay in the middle of her price range, not even exceeding it.

Rorer's Realtors were Maria DelBoccio and Michelle DePinto of Coldwell Banker Northwest in Arlington Heights.

"We have been seeing many more singles than in the past because their buying power is so much more than it ever was and the interest rates are so low," DePinto said. "The singles are realizing that buying is better than renting or living with their parents.

"We have never seen homes this affordable because the market is saturated with foreclosures and short sales, which are bringing prices down," she continued.

Many single buyers like Rorer are choosing to stay in the suburbs, as well.

"Those who are staying in the suburbs are really the ones who are thinking ahead. They know that they won't have to move anytime soon," DelBoccio added.

Like Beaver, DePinto and DelBoccio are also finding that most singles do not want to deal with the delayed gratification of waiting months for a response from a bank on a short sale.

"Once they are preapproved for a mortgage, they want to get a house," DelBoccio said.

The duo has also noticed that many singles can afford a brand new or well-maintained house. So that is what they want.

"This generation won't have the experience of fixing up a home. They don't want to put in the elbow grease. They come in looking for granite, stainless steel and hardwood floors, in our experience," DePinto stated.