Buying your first home is an exciting time. But before you jump into your home search, it’s important to understand the market—and, more specifically, how the market is impacting first-time homebuyers.
A recent article from Forbes outlined the biggest challenges facing first-time homebuyers in today’s market, including:
- Competition. Record low mortgage interest rates are driving more buyers into the market—but with inventory shortages across the country, there is far more demand than supply, resulting in many homes getting multiple offers.
- Higher home prices. All the competition is also driving up home prices, with the median home price in the US sitting at $350,000—a 12.9 percent year-over-year increase.
- Stricter credit requirements. The COVID-19 pandemic has caused many lenders to tighten their credit requirements—and many now require higher credit scores in order to qualify for a mortgage. (As of July 2020, the median FICO score to qualify for a mortgage is 700—but that can be much higher in more expensive markets like San Francisco, where the mean origination FICO score for homebuyers is 777.)
The Takeaway:
So, what does this mean for you? There’s no denying that there are certain challenges in today’s market for first-time homebuyers. But anticipating those challenges can help you be better prepared—and increase the chances you’ll successfully find and purchase a home.
If you’re concerned about any of these potential roadblocks, talk to your real estate agent; they can help you navigate today’s market and overcome any hurdles on your path to homeownership (for example, by exploring mortgages with lower down payment requirements, like FHA loans, or helping you identify more affordable areas to focus your home search).
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