In wake of home crisis: buyer education

Prices of existing U.S. single-family homes have slumped over the past year in what many see as the worst U.S. housing market in a century.

According to the Standard & Poor's/Case Shiller home price index data for March, prices of previously owned single-family homes were down 14.4 percent year-on-year.

But that dip in prices has been accompanied by rising interest among renters in buying a first home.

"We're seeing an increase in consumer awareness of what home ownership involves," said Milton Sharp, a senior home ownership specialist at NeighborWorks an umbrella organization of 230 nonprofits nationwide, "and a desire from people to find out what their options are."

For people like Richard Rodgers, a steel cutter who lives in a southern Memphis suburb just a stone's throw from the Mississippi state line, low home prices represent an opportunity to buy a first home. Rodgers, 39, has found a three-bedroom home for $74,000 he hopes to buy.

"It's time to buy a place for my wife and to make my kids happy," said the father of two in the living room of his rented home. "And it looks like a great time to do it."

But Rodgers' Realtor, Kizzy Neder of Lawrence Johnson Realtors Inc, persuaded him to sign up for United Housing's home buyer classes before signing a contract.

"I tell my first-time buyers you have to know what you're getting into before it's too late," she said.

Rodgers said the class helped him appreciate buying a home in an entirely new light.

"The class taught me that this is a long-term investment, the biggest I'll ever make," he said, holding a framed certificate from the course. "And it's not just the house, I've to think about property taxes, bills and so much more."

Rodgers said he will probably still buy his dream home, but only after checking if he can afford all his bills.

Chris Krehmeyer, executive director of St Louis-based nonprofit lender Beyond Housing said that the spike in demand for home buyer education was welcome but long overdue.

"People need to be frightened when it comes to buying a home," he said. "It's not an investment to be taken lightly."

In some places, education may not be enough. Kevin Stein, associate director of the California Reinvestment Coalition -- which represents 250 nonprofit groups and public agencies -- said there has been little interest in California in home buyer classes because of the scale of the housing crisis there.

"It's an encouraging sign that some valuable lessons have been learned from the crisis," he said. "But even if we were to witness the same level of interest in home buyer education, I doubt our members could handle it."

"Right now, it's all we can do to keep up with the demand for foreclosure prevention counseling."

(Reporting by Nick Carey; Editing by Eddie Evans)