While first-time buyers now represent over half of the prospective buying pool, that doesn’t mean that all of them will successfully navigate the buying journey.
Indeed, I dubbed this an “Oh, shift!” moment for the industry, because these buyers face more challenges than the buyers who have dominated the market for the last five years.
First-time buyers are more than three times more likely than a repeat buyer to say that they lack the funds for a down payment. Likewise, they are 2.9 times more likely to be held back because they are subject to the terms of a lease. And they are 2.7 times more likely to say that they need to improve their credit score.
Other big challenges that hit millennial first-time buyers more than other buyers include qualifying for a mortgage and finding a home that fits their budget range.
To see them succeed, we need more affordable homes for sale, supported by more new construction. We need to see a loosening of credit, along with only limited increases in mortgage rates.
These real estate newbies will also need lots of education, advice, and support.
Are you one of them? Well, here are a couple of my top tips for first-time buyers heading into the 2017 buying season.
Understand the importance of improving your credit score, to ensure you can qualify for the lowest mortgage rate.
Think you need to put 20% down, because that’s what your parents did? You don’t. It is possible to get a mortgage with less than 5% down. The average down payment in the U.S. so far this year (through September) is 11%.
The good news is that we have an entire profession dedicated to helping buyers and sellers of real estate. One of the most important steps that buyers of any kind can take once they decide to buy a home is to find an expert local REALTOR® to represent them and help them through their journey.
Because first-time buyers have to come to grips with the fact that buying a house in reality isn’t much like buying one on reality TV. You think you’re going to find the perfect house after visiting the magic number of three possible homes? Sorry, think again.
So if I could only say one thing to all of the first-time buyers out there, it would be this: Don’t buy a home without a REALTOR® acting as your buyer’s agent.