First-Time Home Buyer Nightmare: Why It’s Taking Longer to Find the Perfect Home
With soaring prices, hordes of competition, and a dearth of properties for sale, snagging the right home for the right price is no easy task. And it’s even worse for first-time buyers.
Of the buyers in the market this past spring, about 42% were shopping for a home for the first time. And their search took longer than ever.
About a quarter of those first-time buyers were looking for more than a year, compared with just 11% two years ago. Meanwhile, nearly a third were in the market for more than six months, compared with only 18% two years earlier.
The results are based on a realtor.com® survey of 879 first-time buyers between March and June.
“First-time buyers are usually younger and are motivated by getting married or starting a family,” says Danielle Hale, realtor.com’s chief economist. “They’re looking for the type of home where they can have it all: space, affordability, and a good school system.”
That may help explain why 45% of new buyers say they’re searching for homes in small towns and rural areas. Thirty-four percent are looking in the suburbs, while just 16% say they plan to stay in a city.
But even people searching in areas with less competition are having trouble finding their perfect homes. About 42% of first-time buyers surveyed say they’re still on the hunt because they can’t find a good home within their budget.
Unlike baby boomers and many move-up buyers, they often don’t have decades of savings to fall back on. (About three-quarters of them are under the age of 45.) And they can’t sell a home and capitalize on the equity from the sale to put toward the purchase of a new residence. Making it even more stressful, competition for affordably priced properties is fierce.
“When the inventory is tight, there are often multiple-offer situations, especially at the first-time-buyer price point,” says Portland, OR–based real estate agent Deb Counts-Tabor of Portlandia Properties. “It’s not easy.”
She worked with one family of first-time buyers who put in 11 offers on homes before their 12th was finally accepted last month. The couple, who have two young children, went $20,000 over asking to get a three-bedroom, one-bathroom bungalow in Portland that needed some work. They had been looking for three months.
Counts-Tabor advises buyers, especially those who are entering the market for the first time, to be patient. They should also be on the alert for a deal.
Bargain hunters may want to consider putting a lowball offer on a home that’s been sitting on the market for a while. Properties that don’t sell within a reasonable amount of time may be overpriced or not exactly in tiptop shape, and the owners may be more willing to unload them for less.
But regardless of what properties buyers make offers on, they shouldn’t overextend themselves.
“Find your price point on each house, and make your highest and best offer. Don’t second-guess yourself if you didn’t get it. You did the best you could,” Counts-Tabor says. “Now move on to the next one.”