Today’s real estate market — with its historically low interest rates and continued high affordability — is an attractive market for buyers. However, it’s a market that is difficult for many buyers to enter, and first-time buyers in particular are finding it challenging to purchase a home.
According to the National Association of Realtors, first-time buyers accounted for 26 percent of home purchases in January. This is down from 27 percent in December and 30 percent a year ago, making it the lowest level for first-time buyers since October 2008. This group of buyers should normally be closer to 40 percent of the market.
Why is the number of first-time buyers so low? “Factors such as limited inventory, tight credit, rising home prices, and climbing mortgage interest rates are hindering first-time buyers,” says Orlando Regional Realtor Association Chairman Zola Szerencses, RE/MAX 200 Realty. “For example, while Orlando’s housing inventory has been trending upwards in recent months, there is a widespread shortage of homes in the lower price ranges. Cash buyers and investors create fierce competition for these entry-level homes.”
In addition, today’s tight credit restrictions are preventing some qualified first-time buyers, and student debt is a growing obstacle to first-time homeownership. A recent NAR survey showed that of the first-time buyers who said it was difficult to save enough money for a down payment, 54 percent of those cited student loans for making it tough.
With all of these obstacles, it’s easy for first-time buyers to feel confused and hesitant about buying a home. The good news is that Realtors can advise prospective first-time buyers on how to proceed. Here are some key suggestions:
Review your finances. Before beginning the home-search process, buyers should determine what they can afford. Carefully evaluate your income, savings, and credit report. Also collect documentation of income and cash available to prepare for the mortgage application process. A lender can evaluate your finances to qualify and approve you for a loan amount. Don’t forget other costs such as taxes, insurance and utilities when calculating a budget.
Determine your wish list. Once preapproved for a loan, buyers should consider what they need and want in a home. Whether it’s a certain number of bedrooms, a large kitchen, or to be close to schools or public transportation, it’s good to have an idea of what you’re looking for in a home and community. Visiting the website myfloridahomesmls.com is a great way to view current Realtor listings and to get a feel for the types of homes that are available in your price range. Visiting open houses is another good way to get a sense of what is currently available and how much house your budget will buy.
Work with a Realtor. It’s true: all real estate is local. It’s important for all buyers — first-time or otherwise — to work with a Realtor who is familiar with your desired community. A Realtor will provide valuable counsel, discuss listings, show you homes in person, negotiate on your behalf, and help you stay focused on the emotional and financial issues that are most important.
To locate a Realtor who is based in your area, speaks your language, or specializes in your interest, visit orlandorealtors.org and click on the “Find a Realtor” link.