New Home vs. Resale: Which is Right for You?

By Ken Harney

Maroon and white accents contrast with gray clapboard. The Stanwyck model by WB Homes. Telford, PA.

Is a newly built home right for you? Do you want a home that you’ve helped design and that offers the latest in energy efficiency and design? Or a previously owned home that may need fix-ups, paint jobs, and walls moved around to create the types of open spaces that make sense today?

These are baseline questions that confront many home shoppers early in the process. Your own answers are likely to depend on your lifestyle preferences, financing needs, and the priorities you put on features like high energy efficiency, functional arrangements of interior living spaces, and your desire, budget and aptitude when it comes to repairs and capital improvements.

There are a number of reasons you might prefer a resale house, even if it needs work. For instance, you may have your heart set on moving to a specific neighborhood in the city or a close-in suburb, where newly-constructed houses are rare or not available unless you buy an existing home, tear it down, and build a new home on the lot. Or you may be a do-it-yourself aficionado and relish the opportunity to take an old house and transform it, even if that takes considerable time and money.

So it’s understandable that some buyers prefer an existing house in an older neighborhood. But have you seriously considered the potential advantages of buying new? Here’s a quick overview of some of the important plusses of new homes to think about:

Energy Consumption/green building. If you care about “green” – whether that means the money you spend on energy bills every month or your concern about the environment – a newly constructed home is virtually always the better option. Homes built today must meet far tougher national code standards for energy efficiency than just a few years back. Most newly-built homes, in fact, come with energy certifications covering walls, roofs, windows, doors and even appliance packages. Virtually no resale homes offer certifications because they were built to much lower standards – often decades ago, when energy usage was an afterthought.

You can retrofit many elements of an existing house to improve its energy efficiency, but it’s costly. Even then, because of design shortcomings, you may not be able to achieve the level of efficiency that is now routine with a newly-constructed home. In addition, new homes typically offer better air filtration which increases indoor air quality, reducing symptoms from those who have asthma or allergies.

Flexibility: Spaces, Wiring Customization to your needs: When you buy a resale house, you get what’s already there. That may include room layouts, ceiling heights and lighting that may have made sense in the1950s or earlier – formal dining rooms, small kitchens, fewer bathrooms and windows, and the like. With a new home, by comparison, you can often participate in the design of interior spaces with the builder, in advance of actual construction. Plus many new homes come with the sophisticated wiring that’s needed for high-speed electronics and communication equipment, entertainment centers and security systems. With an older home, you may have to spend substantial sums of money to take down walls where that’s possible -- some are so-called load-bearing walls that are not easily moved – to enlarge rooms in order to create the flowing, more open living space that is preferred today.

Replacement Costs: By definition, with a new house everything is new, including costly components -- such as the furnace, water heater, air conditioning unit, kitchen appliances and roof, -- and doors, windows, and more. In a new home, most of these components come with a warranty, sometimes for up to 10 years. With a resale house, the equipment and structural features you buy have been in use for awhile, and may be close to needing replacement. There may or may not be warranties, but if there are they probably have significant limitations.

Consider some of these typical capital improvements that may be part of the true cost to you over the early years of a purchase of an existing house:

• Heating and air conditioning: The typical furnace has a 20 year life expectancy; the typical central air system 15 years. Replacing them could cost you $5,000 (air conditioning unit) and $4,000 and up for the furnace, depending upon the system you choose.

• Flooring/carpeting/tile/hardwood floor refinish: You’re virtually guaranteed to replace some carpeting in a resale home and you may need to upgrade other flooring or finishes. Costs can run anywhere from a few thousand dollars to well over $15,000, depending on your choices.

• Roof: the average shingled roof lasts about 25 years. Replacement costs can be anywhere from $5,000 up.

• Exterior painting. With a new house, you get to select the color. With an existing house, there’s a good possibility you’ll want to repaint. Typical cost: $5,000 and up.

• Interior painting. Again, with a new house, you choose the wall colors of the rooms as part of the package. With an existing house, you’re probably going to want to repaint some of the interior. Even if you do it yourself, it will cost money and time.

• Kitchen remodel: think anywhere from $20,000 to $40,000.

• Master bath remodel: $15,000 and up.

Bottom line here: Although you – and your budgetary resources – control what you improve and when, it’s highly likely that you’re going to spend money on at least several of these capital improvements in the early years following purchase of a resale house. They are the unadvertised costs of not buying new.

Safety Features, especially from fires: Newly-built homes come with modern fire retardants in materials such as carpeting and insulation, unlike most existing houses. Builders also hard-wire smoke and carbon monoxide detectors into their homes, making it unnecessary for new owners to install less-dependable battery-powered detectors. Many builders also back up their hard-wired detectors with battery power to handle electrical outages.

Mortgage Financing: Builders often have mortgage subsidiaries or affiliates, and are able to custom-tailor financing – down payments, “points,” other loan fees and even interest rates – to your specific situation. Many are also willing to work with you to help defray closing costs at settlement. Sellers of resale homes may be willing to offer contributions to settlement charges, but you can be certain they don’t own a mortgage company and thus have the leeway to come up with the loan you need. When you finance a resale purchase, you are basically on your own.

Resale value: You may plan to live in your next home many years, but at some point, most people sell a given home for any of a myriad of reasons – moving to a bigger home to accommodate a growing family, moving down to smaller digs when children are gone, moving across town or across the country for another job, etc. While the home you sell will (by definition) no longer be new, a 5-year old home will often be more desirable – given all the features above – than a 25-year old home at resale.

The decision to buy a newly built or used home is ultimately best made by each home buyer. Now you know the questions to ask, and the relative costs involved, in order to make the best decision for you.

Home Building on the Rise in 2014

The prospects for home building in 2014 are bright. National Association of Home Builders is forecasting a nearly 25% gain in total housing starts, with a 32% pickup in single-family construction. And the coming year will come atop the gains of 2013. NAHB expects that the final numbers will show that housing starts expanded almost 18% last year to a total of 921,000.

November housing starts data from the Census and the Department of Housing and Development show an uptick after weakness in home construction during the fall. Total housing starts topped an annualized pace of one million, the first time since 2008. Single-family starts rose to 727,000, a 20.8% increase over October and the highest since December 2007. Multifamily starts rose to 364,000, a 26.8% increase over October.

The government data also show that the seasonally adjusted total number of single-family and multifamily homes under construction has now increased for 27 months in a row, growing from 413,000 in August 2011 to 685,000 in November 2013. This continuous growth provides a robustness check on the state of the housing recovery and sometimes volatile monthly data.

Consistent with these data, builder confidence grew at the end of 2013. The December NAHB/Wells Fargo Housing Market Index rose four points to 58 as builders recovered from hesitancies in October and November. The increase puts the index back up to the peak it reached in August before the rise in mortgage rates and the uncertainty caused by the debt and deficit debate cooled confidence. The December index is 37 points above the December 2011 level. All three components also showed significant increases, with current sales rising 6 points to 64, the highest since December 2005. Expected sales increased 2 points to 62 and traffic increased 3 points to 44.

The Census also reported new home sales were steady in November, declining a statistically insignificant 2.1% from an unusually high October. The average for the first two months of the fourth quarter is the highest since mid-2008. The previous three months were also revised upward by a total of 88,000 sales. New home inventories dipped to 167,000, representing a 4.3 months’ supply and the lowest months’ supply level since the first quarter of 2013. 

Interest rates remain low, helping to support sales. Data from the Federal Housing Finance Agency indicated that the average contract interest rate for newly built home purchase loans fell to 4.26% in November. Rates can be expected to increase in a little in coming months, in part due to the Federal Reserve’s announcement that it will begin to taper its Quantitative Easing (QE) program of asset purchases. NAHB expects the 30-year mortgage interest rate to increase, on average, to 4.8% in 2014 and 5.6% in 2015.

In addition to interest rate increases, another headwind for housing demand is the recent announcement of lower FHA loan limits that will restrict their size in certain areas. NAHB estimates that at least 400 counties will see declines of more than 10% from 2013 limits, which will hurt prospective first-time home buyers.

Prospects are positive for multifamily development going forward. NAHB expects more than 8% growth for multifamily starts in 2014, and recent data support this forecast. As reported by the Survey of Market Absorption of Apartments, three-month absorption rates for rental (71%) and for-sale (84%) multifamily units increased for third-quarter dispositions of units completed during the second quarter. Both rates represent post-recession highs, indicative of healthy demand for multifamily housing. November CPI data indicate that real housing rents have increased by 1% over the past year.

Private residential construction spending was up 1.3% in November, with single-family spending up 1.8% and multifamily up 0.9% for the month. Improvement-related spending, a key gauge of the remodeling sector, was up 2.2% for November, and increased 7.1% for the first 11 months of 2013.

While existing homes sales, as reported by the National Association of Realtors, were down 4.3% in November, pending home sales increased for the month, as home buyers adjusted to a new interest rate environment and consumer confidence improved. In fact, survey data revealed a significant bounce back for consumer confidence in December, following the political drama in Washington that surrounded the partial government shutdown. Higher home prices helped, with the Federal Housing Finance Agency reporting slights gains for prices in October, although the recent run-up in prices has hurt affordability among first-time buyers, who now make up only 28% of existing home buyers.

Underlying these positive developments for housing is an economy that continues to grow, albeit never in the high gear that is typically seen after a recession. Gross Domestic Product grew 4.1% for the third quarter, higher than initial estimates and an improvement of growth rates of 2.5% and 1.1% for the second and first quarters respectively. However, while part of the upward revisions for the third quarter was attributable to consumer purchases, another portion was allocable to increases in inventories, which can foreshadow paybacks against growth in future quarters. Nonetheless, the recent data are positive for the economy overall.

In analysis news, NAHB published survey data reporting the average costs of constructing a single-family home in 2013. NAHB economists also examined long- and short-run trends in population mobility, with recent indicators moving in the right direction for home buying and home construction. In tax policy news, a recent tax reform proposal would revamp the nation’s energy tax rules, with significant impacts for home owners. Finally, NAHB published survey data of the federation’s associate members, those members who help builders build.

Renters can get dibs on company's brand-new homes

A Spring Hill-based real estate investment company will break ground next month on the first dozen of 50 homes it plans to build in the Atlanta area next year — primarily targeting renters seeking a path to home ownership.

Kinloch Partners LLC has purchased 200 lots in six subdivisions in southwest Atlanta for the homes, and it has plans to buy more home sites.

The 2,000-square-foot homes will feature four bedrooms, two full baths, a half-bath, granite countertops, stainless steel appliances and fireplaces.

They’re being pitched for $699 a month to buyers who can put down 3.5 percent and qualify for an FHA loan. Those who don’t qualify for loans can rent the homes for $1,200 and take time to build their credit and save for a down payment.

“Many people that make $50,000, $60,000 a year are trying to live the American dream, but because of a bankruptcy or a foreclosure or divorce or some problem with credit card debt, student loans, they’re being held back,” said Bruce McNeilage, Kinloch’s co-founder.

“I can deliver them a house for $699. We can build quality, clean, brand-new houses and sell them to someone for much less than they could pay for rent.”

With the additional taxes and mortgage insurance, the monthly costs Kinloch is touting at website 699homes.com would increase to about $899 a month for the life of the 30-year fixed-rate mortgage.

McNeilage, a Spring Hill resident who also owns apartments and other Nashville area properties, said Kinloch could bring the rent-to-own concept to the Nashville area in infill locations that would be sold at higher prices because lots costs more here.

Real estate experts said the rent-to-own concept should help meet the needs of potential homeowners most affected by tougher lending standards.

“That he’s willing to do rent-to-own own on a brand-new house, that’s innovative,” said Scott Ractliffe, a senior vice president and mortgage adviser at Nashville’s Pinnacle Financial Partners. “In our market, a brand-new $130,000 house won’t be anything like what he’s talking about.”

“In a transitional market, where buying was out of favor and now is coming back in favor, that’s a hybrid product that can be attractive,” said Dean Schwanke, senior vice president for case studies and publications with the Urban Land Institute, who spoke in Nashville on Wednesday.

Before buying the Atlanta lots for $2,000 to $4,000 apiece, McNeilage turned a profit from buying empty completed homes in subdivisions there and selling them to hedge funds and other investors after the prices rose. He then expanded into buying lots to build rental homes

7 steps to securing your dream home in 2014

Securing a ‘dream home’ is likely at the top of many New Year’s resolutions for 2014. For most of us, a dream home is one that is designed to our preferences, is tailored to our living needs, and which we can grow into as our families grow. New-build homes offer the best-fit solution.

It’s no secret that searching for a home that fits every want and need can be a frustrating process, especially when you’re aware that your budget won’t stretch to renovations. What buyers are now realising is that new-build homes are equally as affordable as second-hand properties, and that, if they buy a lot and work with a builder from the start, they have the say in the design from the very beginning. The added incentive of government grants and low interest rates are also major selling points for buyers.

See my tips below on how to secure a new-build dream home in 2014.

1.       Prioritise your needs and wants. It’s easy to get carried away with add-ons and extras. Map out what you can afford to spend and then outline what you ‘need’, sourcing what this will cost you. If you have a reserve to play after that, you can then begin choosing the luxuries that you ‘want’. If this is your first home then it’s better to purchase a new-build that you can afford that’s also a great investment. That way you’re only paying for what you need right now – an upgrade to a larger or more luxurious home can happen when you’re ready.

2.       Take advantage of low interest rates. With interest rates currently sitting at a 40-year low, now is a better time than ever to apply for a mortgage. Remember to factor in at least a five per cent rate increase over the life of your mortgage to help determine how much you can afford to borrow and the size of your repayments.

3.       Buy a house and land package. Being on a similar price level to second-hand properties, house and land packages are an increasingly popular choice in suburbs with room for growth. These communities in development maximise choice in terms of the size and shape of the land, and the positioning, size and design of the home - including all the key features buyers need to suit their living needs.

4.       Apply for grants. Don’t forget to search online to see if you’re eligible for a government first home buyer’s grant. Some states such as Queensland offer up to $15,000 to those buying a new home.

5.       Negotiate with builders. Do your homework by researching builders in regards to reputation and price. One increasingly popular way to research is through online reviews and forums. Choose your top five builders and source costs. Let each know what the other is offering. It’s likely that they’ll be able to compete on price or offer additional extras. Remember, a quick and cheap service is not necessarily the best service.

6.       Ensure the community is a good fit for you. While the property is important, it’s the community that makes it a home. Before buying, take the time to speak with the neighbours, try the amenities and find information about funding of local facilities, reputation of the local schools and public transport. If you’re looking into a development, a good development should have a sales team that takes you around the neighbourhood and discuss the plans and services in our community.

7.       Use the First Home Savers account. For those whose first-home purchase is a longer-term plan, the First Home Saver Account can help. Each year the government will make a 17 per cent contribution on the first $6000 deposited into this account each year – that’s an additional $1020 each year. Withdrawals can only be made after four years. First Home Saver accounts are available from some banks, building societies, credit unions, friendly societies, life insurance companies and super funds.

Did you know: St. Johns County residents with a valid ID are always admitted free of charge to the following attractions.

St. Johns County residents with a valid ID are always admitted free of charge to the following attractions.

Oldest House, the Lightner Museum, the Ximenez-Fatio House, the Oldest Wooden Schoolhouse, City Walks History Mystery Murder Evening Tour and the Hotel Ponce de Leon Legacy Tours at Flagler College. The daily tours and wine tastings at the San Sebastian Winery are free to everyone. Also, admission is free to everyone at the Fort Matanzas National Monument, St. Photios Chapel, thePena-Peck House, the Father Miguel O'Reilly Museum and the Mission Nombre de Dios Museum(donations are welcomed). 

ALSO:  There are many other local attractions offer discounted admissions to St. Johns County residents with valid ID.   There is so much to do in the St. Augustine area... it's such a GREAT place to live!

Call or stop by to see me to get an update on the available homes and communities by Landon Homes.

Visit http://Landon-Homes.net

New home building dips, but best since 2007

By Martin Crutsinger

ASSOCIATED PRESS

WASHINGTON — U.S. home construction slowed in December but ended 2013 with the best showing since the housing bubble burst.

The Commerce Department said Friday that builders broke ground last month at a seasonally annual rate of 999,000. That’s 9.8 percent lower than November’s pace of 1.12 million, which was the fastest in five years.

For the year, builders started 923,000 homes and apartments, up 18.3 percent from 2012. It was the fourth straight annual gain and the strongest since 2007, when 1.36 million homes were started.

The housing market has been recovering steadily over the past year, helping to boost economic growth and create jobs. But a rise in mortgage rates from record lows reached a year ago have started to weigh on those gains.

Still, economists said they December’s dip in activity followed a huge gain November. They also blamed some of the decline last month on cold weather, which may have disrupted some construction activity.

“Despite really bad weather, builders still managed to keep digging and that is a great indication that the housing market continues to move forward,” said Joel Naroff, chief economist at Naroff Economic Advisors.

For December, construction of single-family homes, which makes up roughly two-thirds of homebuilding, fell 7 percent to an annual rate of 667,000. Construction of apartments, which can be more volatile, dropped 14.9 percent to a 332,000 rate.

Applications for building permits, considered a good sign of future activity, fell 3 percent in December to a rate of 986,000. Single-family permits fell 4.8 percent. Permits for apartments were unchanged.

Construction activity in December fell 33.5 percent in the Midwest and 12.3 percent in the South. Construction rose 15 percent in the West and was unchanged in the Northeast.

Mortgage rates are roughly a percentage point higher than in the spring. Still, they remain low by historical standards. The average rate on a 30-year mortgage fell to 4.41 percent this week. That’s down from a peak of 4.6 percent in August.

U.S. homebuilders remain generally upbeat ahead of the spring home-buying season.

The National Association of Home Builders/Wells Fargo builder sentiment index slipped to 56 in January, down slightly from a 57 reading in December. Readings above 50 indicate more builders view sales conditions as good rather than poor. Even with the small dip, the overall index remains in positive territory and is nine points higher than it was a year ago.

The spring buying and selling season kicks off next month, traditionally the time of the year that sets the tone for residential hiring and construction. Many builders, particularly smaller firms, sell homes that will take months to build.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the homebuilders association.

Swap something old for something new at Landon Homes

Property-seekers can save money, time and stress by snapping up a brand new home at one of Landon Homes newly built communities. 

Landon Homes is a locally owned and staffed new home construction company in Northeast Florida that is committed to a personal, hands-on approach to building homes. Our goal is to not only build an exceptional home, but also deliver an memorable homebuilding experience for our customers. Communication, honesty, integrity, a commitment to doing it right, and creating a relationship that extends beyond the home sale and closing are our top priorities when helping homeowners discover their dream home. Once in their new home, homeowners can rest assured that we will stand behind our product long after the sale.

Buyers can choose from a great selection of high-quality new properties, safe in the knowledge there are no nasty surprises in store. Our philosophy is simple - Do the right thing even when no one else is watching. If it is wrong, fix it. One size doesn't fit all. Build the best home for the money. And most importantly, listen to our customers and do our best to build a great house while making the process a great experience.

New-build customers can also rest assured that there will be no expensive DIY problems, unforeseen repairs or time-consuming maintenance work, which is often the case with second-hand properties. 

Nicole at Landon Homes said: "Purchasers moving into second-hand properties are often plagued with unexpected DIY jobs, whereas buyers who choose a brand-new property can move straight in and start enjoying their new place.

“At Landon Homes there is something for everyone – first-time buyers, homeowners seeking to upgrade to a bigger and better property, and downsizers alike.

“I would urge anyone who is thinking about finding themselves a new place to act without delay and find out more about the fantastic lifestyle they could be leading at Landon Homes”

Higher mortgage rates spark home buying

Rates climbing: But real estate professionals say they are still attractive

Mortgage rates are on the rise with no end in sight, a trend that is resulting in an uptick in homebuying to beat the increases, local real estate agents say.

New federal regulations that make it tougher to get a loan, combined with an improving economy, which prompted the Federal Reserve to scale back its bond-buying strategy that is helping to bolster growth, are all contributing to the increase in mortgage rates, said Carlie Ferraro,  president of William Raveis Mortgage in Shelton.

Mortgage rates "have started to go up, and in all likelihood they'll continue to go up," he said, commenting that the typical 30-year fixed-rate mortgage interest rate is in the mid-to-high 4 percent range, compared with the low 4-percent range a month ago. "The government has overreacted, and it could tamp down the market."

One of the goals of the federal government through the process is to encourage more private lenders to increase their mortgage velocity by taking advantage of the increased rates and reduce the pressure on government mortgage programs, according to Ferraro.

Despite the rising interest rates, Ferraro, whose parent company is William Raveis Real Estate, said it's a good time to buy a house because the rates will probably go higher, and the house-buying market is normally slow this time of year.

To qualify for a conventional mortgage and meet the federal qualified residential mortgage standards, home buyers are going to have to improve their credit scores, he said.

"Make sure your credit is as pristine as you can make it. You should try to get your credit score up into the 700s," Ferraro said.

Spoiled buyers

Those who have a solid credit score and a down payment have been reacting to climbing interest rates by shopping for a home, said Scott Cooney, president of ERA Goodfellow Homes in Danbury, referring to projections by various lending organizations -- all showing that 2014 rates will rise.

Commenting that the interest rate for a 30-year fixed mortgage is in the 4.3 percent range, he cited Fannie Mae projections that the rate will be in the 4.8 percent range by the fourth quarter.

Freddie Mac sees the 30-year fixed rate in the 5 percent range, while theNational Association of Realtors and Mortgage Brokers Association both project a 5.3 percent rate.

"We're seeing a sense of urgency from our buyers -- to buy something right away," Cooney said, commenting that projected rates are still far lower than in the past and home buyers have been spoiled by super-low rates. "In 1989, when I bought my first house the interest rate was 13.2 percent."

He estimated that the difference between a $250,000, 30-year fixed mortgage at 4.3 percent and one offered at 5.3 percent would be $150 per month.

Under $1 million in Greenwich?

Mark Pruner, an agent with Berkshire Hathaway Home Services, in Greenwich, is seeing much the same reaction by buyers searching for homes below $1 million in that upscale community.

"I have a listing in Old Greenwich for $598,000. It's been shown 20 times in the past 10 days. I'm seeing with homes below $1 million that there is a lot of activity," Pruner said, but a jump in mortgage rates could put a financial burden on some home buyers.

Pruner has not had any takers yet for the Old Greenwich house, saying it needs work and is close to a busy street.

"Young buyers want something that they can move into. I had a house at Pemberwick (a Greenwich neighborhood), and it went under contract in a couple of weeks, he said.

Rising interest rates and a paucity of homes on the market in Greenwich are combining for a hot market, said Pruner, estimating there are 400 homes for sale in the town.

Despite the rising mortgage interest rates, high income earners are looking for ways to re-balance their income portfolios and shopping for high-end, multi-million-dollar homes in Greenwich, he said.

"Some are looking at homes over $3 million as a place to put their capital," Pruner said, commenting that he saw some wealthy New York City residents looking for homes in Greenwich when it became apparent that Democrat Bill DeBlasio was going to be elected their mayor.

Year in review

The year 2013 was a solid one in terms of home sales in Connecticut and Fairfield County, according to Re/Max of New England, which said this week that year-over-year single-family home sales increased 18.4 percent in the county, while condominium sales rose 30.2 percent.

The average median price for a single-family home in Fairfield County was $390,955 in 2013 -- a 3.6 percent rise over 2012.

And Virginia Klein, broker/owner of Re/Max Heritage in Westport, said she believes the strong demand for residential real estate will continue in the county and Connecticut, but higher interest rates could affect some home buyers.

"Rising interest rates might put a little bit of a damper on first-time home buyers," Klein said, but she and her staff are still busy. "The spring market has started and that's early. Binders are coming in. It's like the roller skates are on, and we're ready to rock."

Declining inventory

Like Cooney, Klein still considers 30-year fixed-rate mortgages in the high 4 and low 5 percent range a good deal and said growing consumer confidence will spur more purchases, but she cautioned that inventory is declining in Fairfield, Westport and Darien.

"We're looking at four to six months of inventory, and it's shrinking every month," she said, adding that she is seeing the relocation market pick up for the first time in a while.

It has become cost efficient for people to buy land and build their homes, according to Klein.

"Consumers are buying up $1 million to $1.5 million properties in Darien just for the land so that they can level the existing home and build their ideal home," she said.

Meanwhile, a dramatic drop in mortgage refinancing applications has taken a toll on mortgage businesses, Walsh said, though his company is adding staff and has moved to a new location in Milford.

"We're holding our own. In this market, that's a victory," said Walsh. "We're on the front lines. We can see if it's getting hot or cold."

At the same time, revised federal standards for the mortgage industry are putting lenders in limbo, forcing them get tougher with their application process when potential home buyers seek out loans.

"The government decided mortgages were the reason for the financial meltdown," said John Walsh, president of Total Mortgage, a direct-to-consumer lender in Milford that is licensed in 30 states. "It's a slippery slope. It's one of those things that will make it more difficult to find a mortgage in 2014."

And those new restrictions put into effect by the Consumer Financial Protection Bureau are sure to put a crimp in housing purchases, he said, adding that as of Friday, mortgage applicants will have to meet stringent debt-to-income guidelines set forth by the new federal regulations.

"Housing may stay on the market longer, and you may not see prices as high. The housing recovery is still in a fragile state. You might see a decrease in interest rates to spur the housing market again," Walsh said, commenting that the economy could suffer. "The home purchase market drives the economy. They (home buyers) go to Home Depot or they hire a painter."

Like Walsh, Heidi DeWyngaert, chief lending officer and president of New Canaan-based Bankwell Bank, understands the need to avoid another housing meltdown, but she said the federal regulations could affect how lenders operate.

The rules "are to protect the consumer from loans for which they do not qualify," she said, and lenders must recognize the consequences because mortgage holders can now sue if they believe they were wrongly directed into a mortgage they cannot afford. "It may impact the housing market."

Some banks might reduce lending, said DeWyngaert, whose bank does offer non-qualified loans, after an intensely scrutinizing application process.

"Our guidelines are not going to change. We use these guidelines as a rule anyway. We'll check every box twice."

Most who qualified for a conventional loan prior to the new regulations will be able to obtain a mortgage in the future, said Steve Habetz, vice president of Stamford Mortgage, a subsidiary of the Bank of Danbury.

"A lot of guidelines. . . already are in effect," he said. "It will make lenders take a closer look at applications."