Oakland represents fertile ground for first-time home buyers
With an abundance of affordable houses for sale in Oakland, the city is fast becoming one of the hottest property markets for young families and other first-time homebuyers to move to. Not only is this a positive sign for the rebounding real estate market in Oakland, but could portend a great sign of recovery for both the city's economy and the nation's overall real estate trends. According to a report from consulting firm Deloitte and Touche, growth in demand for single-family homes in 2013 will likely be driven by first-time homebuyers. Recent research revealed that 39 percent of borrowers of housing loans were first-time homebuyers, up from 37 percent in the same survey last year.
However, in an ironic paradox, first-time homebuyers also see the most difficulty in acquiring the financing to purchase the homes, despite being the most enthusiastic shoppers on the market. According to CNBC, mortgage loans for first-time homebuyers - which are typically insured by the Federal Housing Administration (FHA) - have become increasingly difficult to obtain.
"Financing of first-time homebuyers with low down payments threatens to become a significant problem in the U.S. housing market," Thomas Popil, research director for Campbell Surveys, told the news source. "Fifty percent of first-time homebuyers use FHA financing, but FHA insurance premiums are increasing and underwriting is becoming more strict."
To help address this issue in Oakland, Wells Fargo will be giving out $20,000 down-payment grants to assist middle-income families with buying homes in Oakland as part of a fair-lending settlement, according to the San Francisco Chronicle. The Oakland program is part of a larger nationwide initiative by Wells Fargo, where the company is providing $50 million in such down-payment grants nationwide and $5 million in the Oakland area alone.
In order to qualify for the down-payment grants, prospective first-time homebuyers must earn no more than 120 percent of the area median income while still qualifying for a mortgage, the news source reports. However, once they have been deemed eligible, they can purchase their own home in Oakland and help the bank and city officials achieve their goals of helping more families plant long-term roots in the city.