News Column

Some singles see value in mortgage payment

August 31, 2014

By Tim Grant, Pittsburgh Post-Gazette

Aug. 31--Steven Ganley was lucky enough to earn his master's degree in accounting from Duquesne University last year without piling up any debt. In the year after he graduated, the 25-year-old landed a full-time job as a staff accountant at a Downtown firm, lived with his parents in Bethel Park, and banked money each month as though he were paying rent.

Despite his clean balance sheet and careful money management, several credit card companies turned him down. Yet he recently qualified for a 30-year mortgage at 3.99 percent through the Federal Housing Authority.

"I believe I have the world record for not establishing any credit and still being able to get a home loan," said Mr. Ganley, who closed on a $150,000 three-bedroom home in Bethel Park last month, which he purchased with a 5 percent down payment.

Married couples with children continue to be the leading demographic for the single-family, home-buying market here and across the nation. But some singles -- especially young singles -- recognize that a mortgage payment on a house can often be the same or less than what they would spend on rent.

The barriers to homeownership that many in their 20s and 30s face -- higher unemployment, lower wages and student debt -- have made it less likely for people in that age group to be owners than in previous generations. Tighter lending standards also have been a factor in a slight decline in single men and single women homebuyers, according to the Washington. D.C.-based National Association of Realtors.

For as long as the Realtors group has been tracking data on married couples and single buyers -- since 1981 -- the percentage of single homebuyers has historically hovered around 20 percent to 25 percent. It fell nationally from 28 percent in 2011 to 25 percent in 2013, according to NAR.

"One of the things we have seen is that single men homebuyers are about half the share of single female homebuyers," said Jessica Lautz, director of member and consumer research for the National Association of Realtors. "Single females make up the largest share of single buyers. Single female homebuyers are second only to married couples."

Many singles enter the real estate market following major family changes, such as death and divorce.

"Lenders look more favorably toward dual incomes, and perhaps they have more buying power as well," Ms. Lautz said. "So, unfortunately, we have seen both the share of single female and single male homebuyers drop off."

Single homebuyers come to the market from all walks of life, and for different reasons that often extend beyond the financial ones. Some want an investment that will pay off down the road, while others are looking for a place to live that suits their lifestyle.

After renting for years, Christa Vattimo, 31, managed to overcome the down payment hurdle by borrowing money from her company retirement savings account at PNC Bank, where she works as a loan analyst. She also obtained a mortgage through PNC for a $97,000, three-bedroom brick home in West View.

"I didn't want to keep throwing money down the drain renting," said Ms. Vattimo, a single mother of a 10-year-old son and a 1 1/2 year-old daughter. "It was important to me to be a homeowner. I want to have equity in something.

"I was nervous that I'd get denied for a home loan being a single parent with money coming out of my salary for day care and child expenses. I could not be more proud of myself being a single parent and a homeowner. Being able to do that is extremely gratifying."

For younger buyers like Mr. Ganley, it can be a challenge to get any type of credit approval, let alone a mortgage.

He said although he had no debt and thousands of dollars in a savings account, Discover and MasterCard rejected him. Dick's Sporting Goods also denied him a credit card, and he suffered more embarrassment when Macy's department store rejected his credit application while a line of people stood waiting behind him at the checkout counter.

Though he had accumulated $8,000 in a savings account at PNC Bank, the bank would not approve him for one of its credit cards with a $300 limit.

"That had a lot to do with me applying for my mortgage at Dollar Bank instead of PNC Bank," Mr. Ganley said.

"In the long run, owning is so much better than renting," he said. "I can build equity and do projects that transform the place before my eyes. When I see something I've done, it's kind of rewarding."

Howard "Hoddy" Hanna III, chairman and CEO of O'Hara-based Howard Hanna Real Estate Services, said single homebuyers have consistently made up about 25 percent of the Pittsburgh region's residential real estate market.

"A lot of those singles buying houses are not first-time buyers," Mr. Hanna said. "They are people going through a marital change such as a divorce or maybe even the death of a spouse.

"Years ago, when people got divorced, they rented apartments and didn't go right back into buying. Now when two people get divorced, after they sell a house for $400,000, the husband will go back out and buy a house for $250,000 and the wife buys a condo for $100,000."

Mr. Hanna said single buyers are behind the explosion in Pittsburgh's Downtown residential real estate market.

"Single buyers want to live, work and play in areas that are close together," Mr. Hanna said. "We are selling more urban houses to singles in Pittsburgh and Cleveland. The density of single buyers is in urban areas where they can walk to restaurants.

"You are less likely to find single buyers in the suburbs. Suburbs still attract couples and families."

Nicole McMahon's main consideration was finding a house she liked that was near her job at Westinghouse Electric where she works as a business analyst.

Ms. McMahon, 24, had lived with her parents in Murrysville after graduating from Penn State in December 2013 with a degree in information science technology. She recently used an inheritance from her grandparents to buy a $169,900 three-bedroom, three-bathroom brick home in Rochester, Beaver County, about 20 minutes from Cranberry.

"It's a little more nerve-racking without having someone else to rely on," she said of the home-buying experience. "It was a little scary to go it alone. But I managed to survive it."

"A lot of my friends are married or engaged," Ms. McMahon said. "I don't have anyone now, and I wanted freedom from my parents. It's nice to get away from my parents, and I didn't want to wait for Prince Charming because I don't know when that will be."

Tim Grant: tgrant@post-gazette.com or 412-263-1591.

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Source: Pittsburgh Post-Gazette (PA)


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