If the real estate market ever shakes the recession, first-time buyers will provide the spark, say builders, who point to Harford County's Riverside community as a prime example.
Several major companies, including Ryland Homes and the Henry J. Knott Development Corp., are building low-cost condominiums, town houses and detached homes in Riverside, a miniature city in Belcamp, three miles south of Bel Air. Prices start as low as $55,400.
"The market is pushing for younger buyers to lead us out of the recession. This area is targeting them," said Anne Madison, a Ryland Homes spokeswoman.
The market of first-time buyers has doubled since the 1980s, largely because that decade's high prices and interest rates caused would-be buyers to hold off until now, Ms. Madison said. At Riverside, 59 percent of Ryland's buyers are first-timers, 34 percent are second-timers and 7 percent are third-timers.
"It's a trend across the country," said George A. Shehan, president of the Home Builders Association of Maryland and vice president of American Landmark Homes Inc. "For the first quarter of 1991 and the last quarter of 1990, the entry-level market held up the best of any market segment."
Robert Lefenfeld, vice president of Legg Mason Realty Group Inc., agrees. "The higher-priced product is more discretionary. Those people can wait until the price is just right."
Also, first-time buyers don't have to worry about selling a home to move.
Legg Mason Realty reports that in 1991, affordable housing projects (priced from about $70,000 to $100,000) are being built faster than other types of housing.
And they hold a large share of sales. In the first quarter of 1991, for example, about 40 percent of new-home sales were priced between $75,000 and $124,000.
"Historically, the affordable housing is always the stronger component of the market in terms of sales," Mr. Lefenfeld said. "A conservative public will increase its emphasis."
Riverside isn't the only area targeted for first-time buyers. Ms. Madison pointed out that Ryland's more affordable town house developments in Columbia's Kendall Ridge, and Crofton's Blue Ridge communities.were targeted for first-time buyers and selling "very well," about three to four per month.
"When Ryland opened in 1967, the focus was on first-time buyers," she said. "That changed in the '80s to 60 percent move-up buyers and 40 percent first-time buyers. Now it's flipped back to first-time buyers."
Areas of Anne Arundel County, Carroll County, Sykesville and White Marsh and Parkview Trails in Baltimore County are other hotbeds of affordable housing, Mr. Lefenfeld added.
Metropolitan Baltimore could use more low-priced homes. According to Nation's Building News, a publication of the National Association of Home Builders, the median new home price in the Baltimore area was $111,000 in 1990 with $40,500 as the average area salary. The region ranks near the bottom of the affordability scale, comparing income to home prices.
At Riverside, Knott is building 72 town houses priced as low as $55,400. Other projects include Keystone Homes' town houses, priced from the mid-$80,000s; American Landmark's town houses, priced from $78,900; and Ryland's mix of 325 condominiums, town houses and detached homes, priced from $65,900. Other builders include Belmark Homes and Questar Properties.
In fact, Riverside's prices are about $10,000 lower than for
comparable homes as close as White Marsh, according to a study by Legg Mason Realty. Riverside's builders stress that point in advertisements and sales pitches.
That has made Riverside a first-time buyer's haven. Many buyers, intheir early 30s, held off during the late 1980s because housing prices and interest rates were high. Forty-two percent of Ryland's buyers have children, 25 percent are married with no children and 33 percent are single with no children, Ms. Madison said.
Other buyers, including senior citizens or "empty nesters," have chosen to "move down" from a larger home into a smaller, lower-priced home.
An area profile done by Riverside's first developer, BLC Properties Inc., showed that Riverside currently has 1,200 families with a median income of $42,000 and 2.5 family members per household.
Though builders are optimistic about Riverside, that doesn't mean the community has not experienced bumps along the way.
This year has been a little "weird," according to Robert McGee, president of Keystone Homes. Sales fell when the Persian Gulf war began and rose when it ended. That meant a strong March and April, but sales seemed to die in May.
"It's back to reality, but we're off to a good start," he said, adding that his development of 60 town houses is geared toward young families, singles and "mingles," a new term to describe roommates or unmarried couples living together. Forty-three of the town houses have been sold.
"We're delighted with the sales," said Linda Leizear, director of O'Conor, Piper & Flynn's New Homes division who is representing Knott Development.