Despite the fact that mortgage rates are near record lows and home prices are approximately 15% below prices during the housing peak, the rate of first-time home buyers has reached an all-time low this year. And while young adults and millennials would like to be homeowners, the National Association of Realtors blames heavy student loan debt and flat-lined incomes for holding back first time home sales. Additionally, tightening lending standards make qualifying for mortgages more difficult for those entering the housing market.
However, future home sales for first-time home-buying millennials and downsizing baby boomers are forecasted for smaller, less expensive homes. So these smaller properties will likely move fast in the coming years, especially if they are internet-ready and in good school districts. In the meantime though, with an economy creeping along and flat wage growth, millennials are staying put in the rental market.
What does that mean for real estate now? Rental-ready properties will remain an excellent buyer investment with rental income helping home owners save and plan for retirement. And for buyers that have the ability to invest in some up-grades, finding fixer-upper properties in good school districts and near main transportation routes can show an excellent return on investment.
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If your sellers have a property that could suite the bill, make sure your marketing highlights the property’s rental potential. Consider joining forces with a professional, reputable property management team as well. They can serve as an excellent contact for referrals and can help potential buyers understand the income a particular property could generate.
Also, if you’re searching for more sellers, (and really, who isn’t?) make sure your marketing reaches sellers with smaller homes in good neighborhoods. Not only are these properties ideal for meeting the current rental demand, they will also sell quicker, especially as the economy picks up and millennials enter the housing market.