First Time Home Buyers are Critical
We strongly support the goals of first time home buyers. We all were (or are) a first-time buyer at some point. But for today’s buyer, the market feels more challenging. It’s easy to make the argument that everything is relative. In the 70’s buying a home was cheaper, but interest rates were (on average) 8.5%. Today, homes cost more but interest rates have been 3-5% on average. Some people focus on paying more for a house but only if it is less in taxes. Others, don’t care as much about taxes if they’re getting more house for less money. It’s all relative.
First Time Home Buyers Face New Challenges
But, today’s first time home buyer is faced with a variety of challenges. Not the least of which is the ‘done’ factor. Most of today’s homebuyers don’t want to deal with ‘sweat equity’ and just want to buy, move-in, furnish and enjoy. As such, what we’re seeing is a market demand that is benefiting sellers. Year over year.
Blue Line: 2 Bedroom, 1 Bath house closed sales over the last 12 months. The median price is $148k or less and the number sold has declined from 275 last year to ~190. That’s a 30% reduction in sales for these homes. But where are the homes? Well, many have been renovated and are being put back on the market in the $149k-$228k range. Sales in this area have shifted up by 11%.
The demand for 2 Bed, 1 Bath homes hasn’t declined, but the desire for a renovated (well done) home has increased. Buyers are willing to spend more on the ‘done’ factor. Sellers should take note; this doesn’t mean your 2 Bed, 1 Bath home is now worth 25-50% more. That’s only going to be the case if it has been renovated. The decline in sales for sub-$148k homes shows that buyers are walking away from homes that lack the design and features desired.
First Time Homes are Good Investments
Some people look at their first home as a step. A step towards the ultimate goal of owning something different. Or living somewhere else. Buying a house as a first-time buyer creates opportunities on multiple fronts. To begin with, it is a step towards that goal. But, if the house is maintained well and periodic updates are made, the house will increase in value. So, if you are out hunting for a good investment deal – look for a 2 Bed, 1 Bath home that can be purchased low, renovated and sold. Alternatively, if you are in the market buying a first time home be prepared to spend about $180-$200k for an updated home. (But make sure it has been well updated and not just a coat of paint and some new countertops.)
Questions? Give us a call.