How 1st Time Buyers Can Take Advantage When Investors Leave the Market
More Opportunities for First Time Home Buyers
Since 2012, real estate investors and all-cash home buyers have played a strong role in stabilizing the U.S. housing market. In fact, according to the National Association of Realtors, in March 2013, these two groups accounted for 19% and 30%, respectively, for all sales within that month.
But now that the market is more stable and home prices are starting to rise again, more and more investors are starting to back away from the negotiating table. The days of scooping up nice properties for next to nothing prices are in the rear view mirror. Simply put, the price of today’s homes are getting high enough that the potential for a healthy return just isn’t there.
So, what does the departure of investors from the market mean for first time home buyers?
Fewer Investors = More Inventory, More Options
One of the most noticeable advantages for first time home buyers who are looking to buy right now is obvious – there are more homes to choose from. With fewer investors competing for homes and fewer buyers making all-cash purchases, there are simply more homes on the market for potential buyers to look at and put offers on. This opens things up quite a bit for buyers who are more motivated to buy homes for living in, rather than for flipping properties.
Easier Loan Terms
Before 2012, it was next to impossible for a first time home buyer to get approved for a mortgage, because lenders were in a state of distress after the housing crash. But thanks to investors and all-cash buyers, the market has evened out to the point that lenders have finally started considering their loan applications on a more logical level. Even though it’s still not a walk in the park to get approved (and it probably won’t ever be again), it is certainly easier to get approved today than it was just a few short years ago.
And, when you add in the fact that there are simply going to be fewer loan applications crossing the desks of loan officers thanks to the withdrawal of investors from the housing market, banks will have no choice but to become a little more lenient in their approval processes if they want to keep the money flowing.
Fall Is a Great Time for First Time Buyers to Act
Historically, fall has the best time of year for first time home buyers to act, because most first time buyers tend to be singles or young couples without children. In most cases, families who are looking for homes will usually either have already made their purchases or they choose to put their home searches on hold until next spring. This is typically because they don’t want to have to coordinate a move in the midst of their children’s school year or around the holidays.
Millennials and the New American Dream
Probably the biggest challenge the housing market is going to have this fall is maneuvering past the fact that renting continues to loom large in the minds of millennials as the ideal housing situation. Unlike past generations, who looked upon owning a home as an integral part of the “American Dream,” today’s younger generation simply doesn’t put as much stock in property ownership. Having lived through one of the country’s worst housing crises will do that to a generation.
But, for those with the finances and creditworthiness necessary, the expected drop in the number of investors and all-cash buyers means that the third and fourth quarters of 2016 offer outstanding opportunities for making the leap from renter to buyer.
Homes.com is the place to dream and discover your ideal home! Are you starting to get the itch to look for your first or next home, but don’t know where to start? You’ve come to the right place! Browse our real estate and lifestyle blog for home buying tips, mortgage guides, DIY ideas, interior design, lifestyle topics, general home inspiration, or just some homes fun. We are sure you can scratch that itch and find all the information and tools you need to help in your home search. Want to start looking at available real estate right now? Head to our home page and check out homes for sale or rent listings all over the country. Happy house hunting!