First-time home buyers are gaining market share, according to the latest industry statistics. Nationally, first-time buyers accounted for 34% of all home buying activity during September, 2016. This is the highest percentage of first-time buyers since 2012.
An improving economy and strengthening labor market, along with low mortgage interest rates, have encouraged more first-time buyers to enter the market. While this is welcome news, first-time buyers remain challenged by a low inventory of affordable homes.
There are numerous reasons why home inventory is low in entry-level price ranges. For example, most home builders do not find it profitable to build homes that cost less than $250,000.
There are homeowners who still cannot sell because they bought at the peak of the market, and lack sufficient equity. Then there are others who aren’t selling because home inventory is low, and they fear being unable to find another suitable home to buy.
Yet the biggest challenge to first-time home buyers may be coming from real estate investors. Investors are frequently searching for homes in similar price ranges as first-time buyers. During September 2016, investors accounted for 21% of all home sales nationally. This is down from a peak of 32% during 2012. Still, today’s investor activity remains higher than historical norms.
As cash buyers, investors have some advantage over traditional home buyers, because they do not require mortgage approvals, bank appraisals or home inspections. The ease and speed of an all-cash transaction can be very appealing to a home seller.
This does not mean first-time buyers cannot compete with investors! A buyer who has a mortgage approval letter in hand, and the representation of an Exclusive Buyer Agent, will have advantages that other home buyers do not!
This is because your EBA represents you, and only you, in the real estate transaction, with no conflicts of interest. He or she will negotiate skillfully on your behalf, and counsel you on market values and contingencies. Your EBA will help you present a compelling offer, while making sure you do not overpay for the home, nor sacrifice contractual protections.
Having the guidance and support of an EBA is essential for first-time home buyers – and for all home buyers! No matter the market conditions, your EBA can help you succeed!