More Single Buyers
Move Beyond Condos

Maureen Manley, a 41-year-old corporate-event planner in Seattle, might have remained a renter longer if it hadn't been for low interest rates. Like many single buyers, though, she snapped up a home during this past year -- and also bought more home than she expected.

Ms. Manley, who had owned a home with her former husband, wanted to buy in the Green Lake neighborhood of Seattle where she was renting. The area, popular with families as well as urban professionals who flock to its casual restaurants and park's waterfront jogging trails, didn't offer many single-family homes -- other than anonymous condos -- that fit her $230,000 to $250,000 budget.

So when she saw a three-story 1,200-square-foot townhome set off from the street and featuring two decks where she could indulge her garden habit, she was thrilled. Despite a price in the low $300,000s, she made an offer -- and negotiated a $20,000 discount since her purchase wasn't contingent on another sale. "I bit off more than I planned because of the interest rates," she says. Otherwise, "I would have had to look at a traditional condo or in a different area. Or I probably would have remained a renter."

While home sales in general have been hot, home buying among single people has escalated in recent years. According to a National Association of Realtors 2003 survey of home buyers and sellers, single buyers are expected to account for 32% of all home buyers this year, up from 26% in 2002. Women account for two-thirds of the single buyers, and real-estate agents increasingly find singles moving beyond the typical low-maintenance urban condo. Many singles, like Ms. Manley, are borrowing more than they'd planned and are choosing properties in subdivisions with manicured lawns and cul-de-sacs.

Rodney Johnson, a real-estate agent for Century 21 All Properties in Chatsworth, Calif., recently represented a seller whose $380,000 house was purchased by a bachelor. While the buyer didn't appear to be planning a marriage or family in the near future, he nonetheless bought a family-sized home with four bedrooms and two bathrooms.

"I think he's probably doing this because of the interest rates and because he doesn't really want condo living," says Mr. Johnson, noting that mortgage rates in his region -- the San Fernando valley outside Los Angeles -- were then about 5.75%. And the proliferation of zero- and 5%-down-payment plans also helps.

Mr. Johnson says that zero-down-payment borrowing at his agency has increased between 1999 and 2003. He also says that buyers who make a 5% down payment -- followed by a first mortgage for 80% of the purchase price and a second for the remaining 15% -- are increasingly opting for these programs because rates on both mortgages are now sufficiently low to make these plans justifiable.

"People are buying bigger," says Dorcas Helfant, general managing partner at Coldwell Banker Professional in Virginia Beach, Va. "I've never seen so many single men buying with [the intention of getting] roommates."

Ms. Helfant says that her region's market began heating up when interest rates dipped to 6%, and escalated as rates fell further. Low interest rates meant that single borrowers could go straight to a single-family home instead of traditionally affordable properties like condos. "You don't have to go to a starter home," she says, noting that houses of about $150,000 in her area cost only $852 per month before taxes and insurance if bought on a 30-year fixed mortgage at a 5.5% rate. "You can go right into the middle of the market."

Linda Metzler, 46, knows all about going to the middle of the market. Five years ago, Ms. Metzler bought a townhouse because that's all she could afford -- but two and a half years later she bought a fixer-upper in the Grenada Hills area of California's San Fernando Valley. She just sold it for $310,000 and is moving to a rural area called Castaic. Now she's buying a brand new home for $235,000, where her monthly costs will be $1,300 to $1,400 combined for her mortgage, taxes and insurance.

Initially, she says, she bought the townhouse "because I knew prices would go up."

She was right: Now in the San Fernando valley, an area outside of Los Angeles that is home to aircraft manufacturers and entertainment companies, rents run as high as $2,000 a month, the rate a friend of hers is paying for a single-family home. "A lot of my single friends want to buy, but they're afraid," Ms. Metzler says. "You can't save fast enough to afford the [rising] price of housing."

The fixer-upper was enjoyable, she says, but with a pending adoption of a two-year-old, she wanted a safer neighborhood and a newer house that wouldn't require any major work. With money banked from the sale of her most recent home, she'll be able to spend about $15,000 immediately to add a new patio, landscaping and fences.

"Interest rates made a big difference to me," she says. So, too, did her growing confidence as a single buyer. "I don't like being in the city," she says. "Out here, you can see the stars at night."

Those who do like city living, though, are buying places they didn't know they could afford until they looked at their borrowing power. "It doesn't feel like a starter place," Ms. Manley says. "And I could live there with a mate if I wanted to."

-- Ms. Doherty is a free-lance writer in Seattle.

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