Ah, the age old tale of a starter home. Do they even exist anymore? What even is a starter home anymore? With rising home prices and a volatile market that had even experts confused - the starter home may be a myth from the past.
Inventory and Cost Issues Hike Up Prices
Well, to start with issues facing first time buyers and those who are looking to purchase any home - there's the issue of inventory. With less homes for sale on the market, it's hard for even seasoned buyers to get into escrow. Those looking to buy need to be open minded and ready to put offers in above asking price. Agents feel like the bearer of bad news frequently.
Another reason that the rental market is continuing to increase is because people simply cannot afford to buy. Especially buyers in the "entry level" phase of life. Apartments, condos, and large homes seem to be most popular right now. But is that because all single story "smaller" properties are already spoken for?
At the end of the day, any property that a buyer purchases first constitutes as the one they start with. The sad reality is that in areas with high home prices, more people are left out of the housing market. It's a fact that it's difficult to buy a first home and that seems to only be getting more true. Which leads us to why so many young people are moving to cities where the cost of living is significantly lower and they can start out on their own.
What Makes a Home "Entry Level"?
Entry level homes or starter homes are few and far between in this market with current home prices hanging out at record-highs. But, a starter home is historically lower in price than many homes on the market and around or under 2,000 square feet. With millennials making up a large majority of the want-to-be-homeowners market right now, it's hard to imagine that they can all find somewhere to live.
The short answer is that they can't. With inventory and prices where they are - bidding wars are aplenty and first time buyers rarely win out. Then, of course, there's the recent mortgage rate increases and starter home hopefuls are left phasing out more than ever. These interest rates are making monthly payments hard to sustain for all but few singles and families.
But that doesn't mean that your clients should lose hope if they are looking to purchase their first house. Agents can help clients prepare and set realistic expectations by getting all of their financials in order, opening their mind when it comes to what they want in a home, and maintaining a positive attitude.
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