Nightly News   |  March 26, 2013

First-time buyers struggle as home prices rise

Home prices are rising at the fastest pace since 2006, making it difficult for the first-time buyer to close a deal. NBC’s Diana Olick reports.

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>>> turning now to the economy and the real estate market at home. home prices are rising at the fastest pace since '06 when we were at the peak of the housing bubble . this is a big change. it may sound like good news if you're thinking of selling. but buyers are increasingly finding themselves in a squeeze. diana olick is with us tonight from washington. diana , good evening.

>> reporter: good evening, brian , for the past seven years, homeownership in america, has been falling steadily. as housing finds new life again, the dream of ownership is edging back, and home buyers are waking up.

>> this is the place.

>> brian and ally earl are ready to buy their first home in alexandria, virginia.

>> this is pretty spacious too.

>> reporter: with the housing market in recovery, renting just doesn't add up.

>> it's probably gone up 25% in rent. at this point the price we're paying for rent we could be doing for a mortgage.

>> reporter: a drop in distressed properties has more americans encouraged about housing. a new cnbc survey finds 79% now say owning a home is an essential part of the american dream . a three-year high. those who say it's better to own than rent also grew to 69%. this new-found excitement is hindered by a severe shortage of homes for sale nationwide, down 19% from a year ago. go local and the drops are more dramatic, in boston, houston, denver and seattle. in the atlanta area , where home listings are down almost 40%.

>> all of these are a four bedroom, five bedroom homes.

>> reporter: this working mother has put in offers.

>> i usually bid 2500 to 3,000 over asking price . and each time we've been outbid.

>> reporter: in formerly hard hit las vegas , big money investors are buying everything in site.

>> there's at least 10,000 individual primary homeowners that are put on the sidelines, because the hedge funds are coming in and absorbing the assets.

>> reporter: investors largely pay with cash and it shows. home sales rose in february.

>> will this be enough space for you?

>> just enough.

>> reporter: as new listings are added for spring, regular buyers who are preapproved for a mortgage are losing out. in alexandria, there are just 255 homes for sale, a 31% drop from a year ago.

>> we have to be on top of the game, and be able to drop everything and check out a house or it will be gone.

>> reporter: investors have been pushing home prices higher faster than expected. but the higher prices get, the more investors may get out, because they won't be able to find such great bargains any more. that in turn will let regular buyers back, in even if they do have to pay a little more to own. brian ?

>> diana olick in front of an available property in d.c. tonight.