As a Golden Colorado Realtor, I thought it might be helpful to first-time home buyers to describe in a general way (without citing specific numbers) the dynamics of the residential marketplace and the challenges they face in buying a home.

Inventory is tight.  There are several reasons for this; 1) new home construction has been off pace for a number of years, 2) many current owners have limited equity in their homes and, in a weak job market with stagnant real wages, they are not able to relocate, and 3) private and institutional investors are buying up properties with cash.

Prices are appreciating.  Rising prices are inevitable when demand pressure collides with limited single- family home inventory levels.  This is classic supply versus demand calculus.

Competition is fierce.  Given the desire for first-time home ownership and the ability for many buyers and particularly investors to buy properties with a large portion of cash, the deals can happen very quickly.
If properties at the entry price levels are in desirable locations and in reasonably good condition, then they are on and off the market quickly.

More stringent lending standards.  The introduction of the Qualified Mortgage Rules and the focus on Ability to Repay means that underwriters are raising the bar on approving loans - they are carefully examining debt to income ratios, mortgage terms and conditions, and credit scores.

Interest rates are rising.  The Federal Reserve is tapering its bond purchases adopting a less expansionary monetary policy which is triggering tighter credit flows and rising mortgage interest rates.

As such, first-time home buyers are weighing their options.  Some might decide to keep renting and accelerate the accumulation of capital for a down payment.  Some might conclude  that their ability to accumulate capital will lag the impact of higher home prices in the future and rising borrowing costs.  For those who decide to buy sooner rather than later, they might be well advised to buy a home on the low end of the range for which they have been pre-qualified for a loan.

A a Golden Colorado Realtor, I will continue to comment on this segment of the market as it is critically important to a strong housing market.