Homebuyers have always found the housing market to be a bit of a challenge. But today’s market presents more obstacles than most.
Demand and prices are high, inventory remains at record lows and the economy is still uncertain. Financial struggles have sidelined many would-be buyers. And these problems could continue to persist into the foreseeable future.
What can you do to help?
Understand the Challenges Homebuyers Face
Over the past 12 to 24 months, home prices have surged. In August, home appreciation was up 17.7% year over year. But prices appear to be cooling. Month-to-month appreciation entering August slowed to just 1.75% (down from 1.97% the previous month).
This is good news for first-time buyers, many of whom have been priced out of major markets. In Q2 2021, average list prices in America’s 50 largest cities were 5.5 times the local median income of first-time buyers.
Builders continue to be hampered by labor and supply shortages. Many would-be sellers have been deterred by the pandemic. Others have opted to rent their properties rather than sell. And senior homeowners want to stay put instead of downsizing/moving to a senior living community.
Student Loan Debt
According to the NAR, 60% of non-homeowning millennials say student debt is delaying their ability to make a purchase. Such debt is preventing 47% of all non-homeowning student debt holders from saving for a downpayment.
Forty-five percent of non-homeowning student debt holders believe their debt-to-income ratio would prevent them from qualifying for a mortgage.
Competition (All-Cash Offers)
With inventory low and demand high, competition is to be expected. But bidding wars are hard to win when you’re up against corporations and investors who can afford to make all-cash offers. Even with ample savings and preapproved financing, it’s hard for the typical buyer to compete.
How You Can Help
Educate your buyers. Set expectations, adjust priorities and encourage expanded search parameters. Lean on your robust professional network. For example, a trusted lender can help financially challenged buyers explore low-to-no deposit mortgage options.
For more helpful industry news and tips, reach out today.