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Why You Love First-Time HomeBuyers

NEW YORK ( TheStreet) -- Amid all the attention on rising home prices, let's not forget that millions of homes are still worth far less then they were at the 2006 peak.

A March 5 report by CoreLogic (CLGX - Get Report), which tracks the housing market, says home prices gained 9.7% in the 12 months ended in January. But then there was this: "Including distressed transactions, the peak-to-current change in the national [home price index] -- from April 2006 to January 2013 -- was -26.4%." (Distressed transactions include foreclosures, short sales and other troubled sales.)

The biggest peak-to-current price declines were Nevada's -51.6%, Florida's -43%, Arizona's -38.9%, Michigan's -37.4% and Rhode Island's -35.5%.

So, what's the long-term lesson here? There are many, but here's one that gets overlooked: You may be better off if the home you own or want to buy will appeal to first-time buyers.

There's a simple reason: The first-time buyer doesn't have to sell a home to buy another. Unlike homeowners who want to trade up, first-time buyers don't have to worry that the housing market is slow or that prices are lower than they once were.

For the first-timer, the key issues are the ability to get a mortgage and to find an affordable home that will grow in value quickly enough to be sold without a loss in three or four years, if necessary. Since the typical first-time buyer is young, a modestly priced home will probably be more appealing than an expensive one.
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