In the last six months, all signs should have been pointing to a rise in homeownership. The employment rate is up, mortgage rates keep going down, and yet realtors are seeing fewer new buyers rather than more. Factors that have been reliable in the past are failing to accurately predict the expected improvement in home purchase rates, leaving realtors to wonder "What am I doing wrong?" The good news is that it's nothing personal about how you're selling. This problem has a lot more to do with the psychology and personal finances of first-time buyers who are facing an unfortunate combination of hurdles both in and out of the housing industry.
In the past, a large portion of home buyers were college graduates working new stable jobs and starting families. Unfortunately, college isn't what it used to be. You need a massive amount of family financial support and even so, students graduate under crippling mountains of debt. Under these circumstances, your potential young homeowners will instead be working for years to pay off their student loans, taking up all the room in their lives for a looming mass of debt. Adding a mortgage on top of this is both unreasonable and unsustainable. While many would love to own their own homes as they start their lives and young families, they simply don't have the freedom. Fortunately, there is Fannie Mae infrastructure that exists for exactly this reason, and realtors can help prospective young buyers navigate their way through deferring student loans and applying for one of the special mortgage opportunities available through that path.
Many people rent until they have enough savings to make a down payment, however the steady increase in housing rents, especially in concentrated areas near city jobs, is eating into that potential savings fund. Around Seattle, for instance, even studio apartments of decent quality cost upwards of seven hundred a month, with the average Seattle apartment cost reaching over a thousand, and you can just forget about renting a full sized home for a growing family on a budget. It can be disheartening to see that savings account number go up so slowly, and many families assume they'll never afford a home without doing the research on assistance and grant options.
Increased Cost of Single-Family
While mortgage rates may be at an all-time low, the prices for homes is still going up. With student loans and high rent prices taking their chunks out of monthly income and potential savings, first time home buyers are struggling to put together enough for a down payment on the single-family homes that are available. To make matters worse, investors and multi-home owners have been taking advantage of the lowered mortgage rates to scoop up most of the affordable homes of good quality available. With this combination of factors, young families making a modest living simply don't stand a chance and the houses that are available within their price range are often too low quality to make leaving their renting situation worthwhile. However, many families don't realize that they can start looking earlier than planned, as a large percentage of homes on the market require less than the standard 20% down payment because the sellers want to see new owners moving in.
Because of the huge wave of lost jobs and foreclosures associated with the recent recession dip, many people who are now old enough and affluent enough to own their own homes watched their parents lose this financial game. Those who went through the upsetting psychological experience of 'the money talk' as they packed up their things and moved into a smaller apartment are inevitably shy about putting themselves and their future children through the same roller coaster. Renting is not only easier to achieve in the current market, but it seems safer from their perspective.
When steeped in a market of ownership shy millennials, what's a realtor to do about the situation? While you can't ease student loans or talk landlords into lower rent prices, you can make a few changes to your personal method and suggest the same to your colleagues. The most valuable opportunities are affordable single-family homes of good quality near job centers. If you want to put more young families into new homes, help them avoid getting bogged down in low-quality or overpriced listings and connect them to these first-time buyer gems. For young families that want a new home but think they can't possibly qualify for a mortgage or put together the down payment, Wyndham Capital can help! Assistance programs like HUD down payment grants and Fannie Mae student loan management can be confusing and hard to approach, but the Wyndham team is mortgage experts. We can guide you through the process, making sure that you get the home you want for prices you can afford.