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Report: Low-End Markets See Mild Upswing

Despite the rash of research and news reports about consumers staying wary of new purchases, some markets are seeing first-time homebuyers run to take advantage of historically low prices and mortgage rates, particularly in government-backed mortgage programs, according to a research note from ""Credit Suisse"":https://www.credit-suisse.com/ch/en/contact_us.jsp. The research firm said that the scramble to scoop up new properties occurred particularly among state and federal programs.

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""Traffic in lower-end communities was relatively healthier,"" particularly as a result of low mortgage rates, ""but buyers are still struggling with financing and job concerns remain at the forefront,"" wrote analyst Daniel Oppenheim.

""At the low end├â┬ó├óÔÇÜ┬¼├é┬ª buyers [are] taking advantage of the strong affordability, proceeding with the purchase,"" he said, citing decisions between affordability and renting for recent homebuyers.

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Oppenheim could not be immediately reached for comment.

The research note questioned whether builders will continue with current valuations, upping prices amid fewer home construction projects, or fall back on competitive pricing strategies in new communities.

""Valuations are only attractive if we aren't headed towards (or already in) another recession,"" Oppenheim said in a section header.

The analyst and others with Credit Suisse reported finding ""several examples"" in which buyers around California exploited lower down-payment programs backed by the government.

According to the research note, some buyers purchased loans insured by the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/fhahistory with as little as one percent for down payments.

""We're fully supportive of efforts to encourage homeownership, but we wonder if programs to allow down payments of just 1% are actually helpful to either the borrower├â┬ó├óÔÇÜ┬¼├é┬ª or the lender,"" Oppenheim wrote, adding that his ""main concern is that in an environment of job losses and falling home prices, many of these buyers would likely have difficulty with their mortgages.""

Credit Suisse analysts highlighted slowing sales over August, with much of the ebb concentrated in still-weak markets.

The cities for these markets include Austin, Houston, Phoenix, Las Vegas, and Washington, D.C.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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