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Millennials Are Entering The Market
Timing-wise, the millennials drew the short straw when it came to real estate. Born between 1980(ish) and the mid 90s, this generation of homebuyers would have been 28 when the housing market imploded a decade ago. If they wanted a loan, they were out of luck because lenders made it very hard to get a mortgage unless you had flawless credit (something few 28-year-olds have) or 20% down (again, who has that coming out of school?)
Now that lending has loosened up, many in this generation are finally looking to walk away from renting in urban centers and to pursue the American Dream. Now, the older portion of this demographic is finding that there isn't much out there to choose from and are noticing there are multiple offer situations across the board.
While frustrating, this lack-of-inventory issue is most likely temporary. The last gasp of the housing bubble and Great Recession. Every segment of the market is connected. Lack of million-dollar estates creates a "trickle-down" effect that results in a entry-level home not hitting the market. How?
The entire market is based on the idea that people move up to bigger and better homes. Because home values generally increase over time, owning a home is an investment. A home purchased 10 years ago for $200,000 might be worth $250,000 today. Use that $50,000 in equity (and then some) and use it as a downpayment on a larger home. That one action by one seller results in not one but two sales - their purchase of the larger home and someone else buying their old home.
If there's a break in that process at any point, then it creates a ripple effect (excuse the mixed metaphors) throughout the entire market. Things have "improved" and prices have even "recovered" but there are still some gaps which are making it frustrating for some buyers to realize the dream.
There's low inventory in every price point so people in every other price point are having a hard time finding the next house, meaning there's ultimately a shortage of entry-level homes for first-time homebuyers to move into. That increases prices so people who would otherwise have saved up enough money for the downpayment can no longer afford to jump in now, but "maybe next year". That means Joe and Jane Millennial duke it out with this year's and last year's buyers for that cute single family home that just hit the market.
What's a hip-young-buyer to do?
Stay connected, but connected to the right sources. Zillow is so big that they're out of date and in this price-point a couple of days behind means you've missed the home totally. Luckily, you're currently on a website that updates every 15 minutes. I can set you up with alerts that will email you as soon as your potential dream home hits the market!
Have a real estate broker that helps you narrow down your search by helping you to focus on neighborhoods that have the homes you're looking in. If you're only going to spend $150,000, then you're probably not going to find that in Gimgoul or Hayes-Barton.
Know what you're getting into. By reading this you're already one step ahead of the game.
Get connected with a lender. I can help you there.
Need to know your next step? Call, text, email!
Real Estate Broker
Michael Cunningham is a Real Estate Broker as well as the go-to tech and marketing wiz at Domicile Realty. A native of Tennessee, Michael arrived in Chapel Hill by way of Washington, DC where he help....
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