Tips for First-Time
Buyers on Budgets

Question: We're really depressed about finding a house. We're first-time home buyers who have been looking for over a year, and we can't find anything that we can afford. What's worse, prices are getting higher and higher! Can you help?

Ann: Yours is the most common question/complaint home buyers have today. Unfortunately, neither I nor anyone else has a quick and easy answer. The fact is that there's a serious housing shortage in this country. It was exacerbated by the depressed prices of housing during the 1990s when builders cut back on construction. Today, there are simply too many buyers chasing too few homes. And given the fact that most people want to live in urban areas near jobs, recreation and shopping where there is little buildable land left, it's unlikely to get better anytime soon.

There are a number of options you can try: you can, of course, choose to continue renting, although rentals are getting scarcer and rents are rising. Or, you could opt to buy a small home, perhaps a fixer-upper and work on it over time.

Alternatively, you can choose to purchase further out. Builders are rushing to develop less expensive land far from city centers. These are usually larger homes, however, this can mean a long and difficult commute.

Or you could choose to purchase in one of the many older, depressed neighborhoods found near city centers. What were previously slums in many cities are rapidly being rejuvenated as first-time purchasers move in and fix them up. You can get in cheap now (many repos are still available) and if you can brave the threats of crime and poor schools for a few years, could end up with a treasure of a home down the road.

Admittedly, none of these choices is as good as being able to afford a plush, big home in a terrific area. But, for those with limited funds, it is a way to get into a very tight market.

Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Buy Your First Home," (Dearborn, 2000).

Submit your question about residential real-estate and home-improvement issues to homes.wsj.com.

Ann, Seattle

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