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First-time buyers key in Spokane County housing recovery

If the Spokane home market is a tad soft, it’s because there aren’t enough first-time homebuyers like Joe Weber and Alicia Isensee.

The two area residents are closing on home purchases. For each, it’s a chance to stop renting and build some home equity.

Weber, a Providence Sacred Heart Medical Center registered nurse, waited until he was 32 before taking the plunge. He’s spending more than $200,000 for a home in northwest Spokane, planning to share it with his fiancée and her two children.

Isensee, a 29-year-old medical records coder, also rented a house during the past two years. Later this summer she plans to move into a comfortable Spokane Valley home with wood floors that she’s buying for $169,000.

For both, the need to remain flexible and unencumbered by a mortgage outweighed the advantages of home ownership.

Theirs is typical of the caution being felt by potential first-time homebuyers who are one reason Spokane’s housing recovery isn’t more dramatic, area Realtors said.

“We’re seeing more first-time buyers who skew older than they used to be,” said Robin Wendel, a broker with Windermere in Spokane.

“We’re seeing them in their 30s, for any number of reasons,” Wendel said.

She and other agents say younger residents generally are spending more time focused on education and trying to land a better job than thinking about a home loan.

Many live with parents or share rentals with housemates, she added. Others on the sidelines have decided they prefer not locking their lives into home ownership, waiting longer before committing to long-term relationships or 20-year mortgages.

The general belief, Wendel said, is that getting a home loan is a major challenge because banks introduced stringent screening criteria that required two years of work experience, documented income statements and an excellent credit history.

“That’s changed, and more young buyers should realize banks are adding new programs making it easier to get a very affordable loan,” she said.

The local housing sector is not different from the national pattern, in which first-time homebuyers are slower than normal in taking part in the recovery.

Data from the federal Housing and Urban Development Department show first-time home buying in Spokane County has softened in recent years but has begun showing a gradual rebound this year.

In 2009, HUD helped finance 1,884 first-time loans in Spokane. During the next four calendar years – 2010 through 2013 – the yearly total was 1,484, 1,029, 1,061 and 1,146, respectively.

The trend so far this year shows a modest increase above the 2013 rate, with 350 home financing loans in the first quarter.

Chris Lucas, a Realtor with Windermere of Spokane, has begun seeing regular emails from banks urging him to send them would-be homebuyers who five years ago the lenders would have avoided, he said.

“I get emails now regularly from lenders saying they’re not using the same requirements” for lending to first-time buyers, he said.

His wife, Karie Lucas, has worked in residential real estate in Spokane for 17 years. She said she’s also seeing an uptick in first-time buyer activity spurred by low interest rates and more government-sponsored programs to entice sales.

The one change is a fewer number of starter homes priced below $150,000, she said. “There’s plenty of inventory (above $150,000) and at $200,000 and above,” Karie Lucas said.

The good news for buyers like Weber, she said, is they have the financial means to buy a first home in the $200,000 and up category.

Jennifer Schupe, a Realtor with Keller Williams in Spokane, also said the local market’s lower-priced homes are in shorter supply than usual.

She contends investors came into the market in late 2011 and 2012 and picked up many of the homes, turning them into rentals.

Even so, Schupe said first-time buyer activity has picked up in recent months. A key government agency assisting lower-income residents with arranging home loans, she said, is the Washington State Housing Finance Commission, based in Seattle.

The self-sustaining state agency provides assistance to lower-income homebuyers by carrying home loans and offering secondary smaller loans to help with down payments.

Two years ago, the commission adopted a new program called Home Advantage that assists first-time buyers with bank financing, said Lisa DeBrock, the director of that program, based in Olympia.

In Spokane County, that program provided help for roughly 75 first-time homebuyers in its first 11 months, DeBrock said.

One year later – for the 13 months from July 1, 2013, through May 31 of this year – the loan program helped nearly 300 first-time Spokane buyers, she added.

The first-time homebuyer is also a critical part of the market for newly built homes. In general, housing experts say first-timers account for about 28 percent of new home sales. But that percentage has fallen to 16 percent so far this year, said the National Association of Home Builders.

Instead of buying a house, Spokane Valley residents Oksana and Yevgeniy Cherkashin have decided it’s easier to build rather than compete for the right first home.

“We looked and almost got the home we wanted. But twice we made offers and didn’t get the house. We got outbid,” Oksana Cherkashin said.

Changing gears, the couple applied for and received preapproval from a Spokane bank for as much as $140,000 to build.

They are looking for available land in Spokane Valley and say they’ll try to start construction this year.

“We definitely want something of our own,” she said. “We’re so over living in a condo and renting.”

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