Savvy shoppers overcome delayed entry

Buying your first home is a traditional rite of passage. Years ago, couples (yes, COUPLES) bought homes soon after they married and they raised their families in those homes.

During the boom housing years, that changed a bit. Increasingly younger people - both singles and couples - bought condominiums, townhouses and smaller single-family homes in order to get a foot in the market and build equity. No one worried about living there long-term. They bought with the intention of selling in two or three years, expecting to make some money on booming property values. Then, they would invest in a larger home and either settle down or, maybe, repeat the process.

Today, post-boom, first-time buyers are older, according to local homebuilders. Whereas during the boom, initial buyers might have been 23 or 24, today, the average first-time buyer is more in the 28 to 30 age range or older, said Nate Amidon, director of sales for William Ryan Homes.

Life changes (instead of investment opportunities) once again are spurring the decision for first-time buyers. Since those life changes of marriage and starting families tend to happen later in life, so. too, is the purchasing of a first home, Amidon said.

"Home equity is not compounding at the rate it was during the boom, so young buyers are no longer viewing the purchase of a home as a moneymaking venture. Consequently, they are choosing not to be tied down to one location or one home until they are ready to start a family, in most cases," he said.

The fact that first-time buyers are now generally older actually blurs the lines with regard to what such a buyer purchases. Many who have high-paying jobs and have been saving money for a number of years are able to hop over the traditional starter home into a house that would have been considered a home for the move-up buyer a decade ago.

At West Point Gardens in Elgin, Pat Curran, president of West Point Builders, has been noticing first-time buyers purchasing homes in three different series - the Park Series detached townhouses and the Classic and Heritage single-family homes.

"Out of the last 10 homes we have sold, six have been to first-time buyers in their mid-20s to their low-30s. First were couples and there was one single (buyer)," Curran said.

"While they like our open floor plans, front porches, full basements and neighborhood feel, we have found the thing our first-time buyers like the best is the fact that we carefully walk them through the homebuilding process. They are nervous about it and love the fact that we have preferred lenders and walk them through the entire building and selections process, showing them the way. That seems to be a big relief," he said.

West Point Gardens' townhouses range in price from $174,990 to the low-$200,000s, while its two single-family product lines have many choices starting in the mid- to high-$240,000s. First-time buyers have generally been purchasing homes there priced up to the $270,000s, Curran said.

"Our first-time buyers have been looking for the structural things like full basements with roughed-in plumbing for a future bathroom, big front porches and open floor plans. Upgrades can come later, in many buyers' minds. So they are choosing vinyl floors that look like wood and they are split 50/50 on whether they choose granite countertops," he said.

"Our first-time buyers, most of whom are coming from Elgin, the I-90 corridor or elsewhere in the Fox Valley, like St. Charles or Geneva, (and) are saying they have finally chosen to purchase their first home because they are worried that after the November election, prices and interest rates may rise," Curran said.

K. Hovnanian Homes has three subdivisions in development that are attracting first-time buyers, said Andy Konovodoff, president of the builder's Chicago division. The floor plans and prices differ from community to community, but they range in size from 1,718 to 3,635 square feet and in price from $269,995 to $410,995.

"I would say the majority of our first-time buyers, however, are looking for homes between $200,000 and $350,000. Those who are able to afford the high end of that range are generally couples where both are working and making good incomes," he said.

Orchard Meadows, a single-family home community in Mundelein, is "selling like hot cakes," Konovodoff said, because it is within walking distance of Mundelein High School and offers a great value. Sagebrook in South Elgin is similarly popular because its single-family homes are in the St. Charles North High School attendance area.

Hanover Estates will open in northern Manhattan in early fall. Since the community is only ten minutes south of New Lenox and its Metra train station, yet in an area where it is more economical to live, Konovodoff anticipates it will also sell out quickly.

Those looking for high-end townhouse living might find what they are looking for at Parkside in Libertyville, which will open in the early fall, as well. That community is expected to attract high-end first-time buyers, as well as empty-nesters who are ready to move down to a smaller home.

"It is not as hard to qualify for a mortgage as it was a couple of years ago, but credit scores are still critical. Those with scores in the 700s will find it easy to get a mortgage, but there are even programs for those with scores in the 600s," he said. "Those who are buying homes in the low $200,000s are basically looking for shelter and they aren't picky about amenities. Those buying higher-priced homes want progressively more amenities."

David Weekley Homes (DWH) of Houston, the largest privately held homebuilder in the country, recently entered the Chicago market and it now has one duplex and triplex community that is attracting first-time buyers. The company has plans to open two more such communities by fall, said Richard Bridges, DWH's Chicago Division sales manager.

Timber Grove, a townhouse community in Naperville, opened recently with duplexes and triplexes priced in the $300,000s. Similar products will be sold at Easton Station in Buffalo Grove beginning in June and at Riverbank Crossing in Geneva beginning in early fall, Bridges said.

These homes feature three or four bedrooms, two-car garages, a full basement with roughed-in plumbing and more.

"Our buyers are attracted to the idea of building their own home. They want a home that is architecturally significant and relevant and not at all monotonous with every home on the street looking the same. They also like the fact that they can make their own custom choices that will reflect their individuality," he said.

"But beyond that, our initial conversations with first-time buyers reveal they are looking for great schools, a great value and the ability to choose their own homesite and amenities," Bridges said.

He emphasized, however, that not all first-time buyers fit into the same mold. DWH is choosing single lots in established communities like Glen Ellyn, Wheaton, Northbrook and Hinsdale, tearing down the existing homes and replacing them with very customized homes in the $600,000 to $1.2 million price range. It recently sold such a home (priced at $1 million) to a couple of financially-secure, first-time buyers who were moving out to the suburbs from Chicago.

Bob Meyn, vice president for the Chicago Division of Taylor Morrison, a New York Stock Exchange-traded homebuilder based in Scottsdale, Arizona, that entered the Chicago market last July by purchasing Orleans Homes' holdings here, is also well aware of the trend toward older first-time buyers.

"Most of those buyers are no longer right out of college. Many struggled getting their start because of the recession, so they have been renting or living at home and they are now in their upper 20s to mid-30s," Meyn said. "Some are coming from the city, but the majority are coming from another suburb along the major work corridors."

But as a result of their older age, they are more savvy buyers. Many of Taylor Morrison's first-time buyers are doing the math and realizing that it is cheaper to finance upgraded amenities like hardwood floors in their mortgage since they are paying such a low interest rate. If they can get all hardwood floors for only an extra $20 or $30 per month, that makes sense to them, so they are doing it, he said.

Meyn is seeing the majority of their first-time buyers at Blackberry Creek in Elburn, where homes start in the upper $200,000s, and at Stonebrook in Elgin where homes start at $299,000. The single-family homes in those communities range from 2,400 to 3,800 square feet.

But he also expects to see plenty of this type of buyer once the builder opens Colfax Crossings in Des Plaines in late June. It will feature 1,800- to 1,900-square-foot, two-bedroom townhouses with two-car garages in a community that is within walking distance of the train and numerous restaurants and shopping opportunities. Colfax Crossings townhouses will begin at $270,000.

All Taylor Morrison homebuyers are offered a one-on-one meeting with a representative so they can choose what types of pre-wiring they want for televisions, computers and other devices. Basements are standard, as are stainless steel GE appliances.

Most buyers are choosing to have solid surface countertops and maple kitchen cabinets, as well as hardwood floors in foyers and kitchens. Many are also adding hardwood floors to the living areas. Tile is still most popular in bathrooms and mud rooms, he said.

Now that first-time buyers are primarily purchasing when they are thinking about starting a family, schools and the amount of space, along with affordability, are key considerations, said Amidon of William Ryan Homes. They want a location close to shopping, entertainment and restaurants, but that is no longer as important as good schools because they plan to stay for a good number of years.

Renwick Place in Romeoville is a perfect example, Amidon said. It is located in an affordable suburb, close to I-55 and Weber Road, but it is also in the Plainfield school district. Homes there range from 2000 to 3000 square feet and generally feature three bedrooms and 2½ baths. They range in price from $248,990 to $294,990.

"Our first-time buyers have generally done their research and they understand that kitchens and bathrooms are very important to the resale value of a home, so they want a modern kitchen with granite countertops, which we include as standard. They are seeing the home as not only a place to live, but also a long-term investment," Amidon said.

As long as they have a full basement, they don't need to finish it, he added. They are also happy with a two-car garage and some nice outdoor space. The exterior architectural style of the home can be simple and they are willing to sacrifice hardwood floors. As for fireplaces, first-time buyers feel they are nice, but are also the first thing they will give up to save money, Amidon said. These buyers' focus is on the kitchen and baths.

"That is where they want to invest their money," he said.