Are you worried about the shortage of starter home inventory?
Starter Home Inventory Shortage
First time buyers may have a challenge in finding their first home this spring. In fact, this March marked the first time that the median price of a home listed was in excess of $300,000. However, even though prices of homes are relatively high, it’s estimated that 75% of the current homes for sale will sell for less than their asking prices.
Why The Low Inventory?
It’s a fact that presently there are fewer homes on the market. And this is partly because new construction has fallen off due to the recession. This trend has been ongoing for the last few years. However, an even bigger contributor to the shortage is the increase in new households being created. And a major cause of this is the Millenials are moving into the home buying market with their families. Simply put, the builders aren’t building enough homes. And the ones they are building, are the more profitable and larger homes.
There Are Positive Signs
First, interest rates are still low. The last time I checked, 30 years mortgages were available for less than 4%. Many first time buyers have the income and the ability to purchase homes, but don’t have the down payment. By taking advantage of the low interest rates, they can buy with a low down payment and finance more. And possibly, they can get the sellers to help with closing costs.
Here’s another thought. Many Americans who lost homes to foreclosure or short sales in the housing crisis, are now able to get a mortgage again. If they start to leave the rental market, at some point there may be more rentals available than there are tenants. This could cause some investors to sell their rental properties. And a large percentage of these rental properties would fall into the starter home price range.
Why Is All This Important?
When someone buys a starter home, it starts the ball rolling. The seller of the starter home buys a bigger, nicer home. THat seller then buys and even bigger, nicer home. Eventually, someone sells a nice, big home and purchase an adult community home. But nothing starts until the starter home is sold.
Bottom Line
If you’re looking to buy that first starter home, there are homes available. Buy you’ll need the assistance of a good Realtor to help you find it before someone else does. Here’s an idea, call us – we’re Realtors. And you’ll need to be ready to move quickly. Have your deposit funds lined up. Have a current Pre-Approval in hand.
Would you rather look for homes in an active adult community?