Over the last several months, Kelly and I have worked with a number of first-time homebuyers. Being a first-time homebuyer can be tough.
The Affordability Squeeze
Affordability is at an all-time low for starter homes, and it’s making things tough for prospective first-time homebuyers to cross over from renting to owning. Demand for starter homes, pushed by increases in rental rates has pushed buyer demand for starter homes.
A recent news story from Bloomberg noted that starter homes prices have past pre-recession levels and the typical first-time homebuyer needs nearly 23% of their income to afford the typical entry-level home, according to data from the National Association of Realtors.
Across the Triangle area, there are a number of older neighborhoods featuring smaller, lower-priced homes that highly sought after by first time home buyers. A few months ago, a client of mine called me about a small ranch home in a highly desirable area of Cary. The home had been recently renovated and had many features sought by my client. When we arrived at the home on a Saturday morning, there was a long line of real estate agents and their clients seeking to tour the home. Ultimately, my client decided not to place an offer on that home but did find a great home in an adjacent neighborhood.
Buying Requires Patience & an Understanding of the Market
This market requires patience! Lots of patience and an understanding of the market. One of the things that Kelly and I do with all of our buyers is schedule a face-to-face meeting with all of our buyers before looking at a single property. Our aim is to understand what is really important to our client. Our second aim is to educate our clients about the market. A huge part of our role is educating clients about the reality of this market.
A Reality Check
Once we have met with the client, we will ask them to meet with a local lender. Reality check time! One of our biggest tips is for our clients to meet with a lender and get pre-qualified before looking at houses. It’s important for a first-time homebuyer, in fact, any buyer to have an understanding of what they can afford before looking at houses.
Last year, I had a young couple call me about a new listing in downtown Apex. Downtown Apex is a very hot area. Demand is very strong and prices have rapidly increased over the past many months. My clients had been to several open houses and had fallen in love with a beautiful neighborhood close to downtown. Unfortunately, they did not qualify for their desired neighborhood. Luckily, my clients found a great home in Fuquay-Varina that didn’t offer the central location they were looking for but did offer many of the home features that they desired.
It is important to remember that you may not be able to get everything you want in your first home and it is important to have realistic expectations.
Here are some quick tips for the first-time homebuyer:
1) Get Pre-Approved: As mentioned above, get pre-approved before looking at homes. Sellers typically won’t accept your offer unless it’s all cash or you have a lender’s letter saying you can get the financing you need to close the deal. Consequently, being pre-approved for a loan is crucial.
2) Prioritize Your Preferences: Make a list of what’s important to you and your family, whether it is location, condition, price or certain amenities, and be prepared to make sacrifices.
3) Know Your Budget
4) Be Realistic
5) Act Fast: If a house is listed Monday, don’t wait until Saturday to see it.
6) Get Educated: Being well-informed about the local housing market — including knowing the prices of recently sold homes, taxes, the school district, etc. — can give you an advantage over experienced buyers who are out of touch with the trends.
About Log Pond Realty @ RE/MAX United
Home is where your story begins. A home is where hopes and dreams are born, memories are made, and lives are lived. We would love the opportunity to assist you with assisting you to write your new story.
We can be reached via email at email@example.com or by phone at 919.589.3576.
We service the Triangle region of North Carolina including Raleigh, Cary, Apex, Holly Springs, Morrisville, Fuquay-Varina, Durham, Chapel Hill, Wake Forest and Garner.