First-Time Buyers Continue to Battle Tough Competition

When homes went flying off the market for all-cash, over asking offers, the Taylor family were at their wits end. It had been months of searching, but all the Taylors ran into were homes sold before a bid could even be placed. They eventually settled for a home without some essentials, that needed lots of renovations, and was over budget. It’s the norm for many first-time buyers, reports CNBC. First-time buyers typically have smaller budgets and weaker credit histories, making it difficult in the heated market, especially when institutional investors are snagging one in every seven homes.

Add all of that together, and the price of starter homes in the U.S. is growing seven times faster than renter income, according to Zillow. It now takes first-time homebuyers a year longer to save for a 20% down payment than it did just five years ago.

When they do buy, many, like the Taylors, are making concessions. Not just on a backyard but on things like having a home inspection, which could lead to more costs down the line, Hopkins says.

“You shouldn’t necessarily have to be in that position,” Hopkins says. “Homebuyers need to be patient. Wait for the right home to come on the market in the right place for the right price.”

But, at least in the Taylors’ experience, first-time buyers don’t want to ask sellers for anything or delay the process, lest they pick another bidder, David says. And when it comes to sticking within a budget, David says potential buyers can forget it.

“People will pay $60,000 or more above the list price without batting an eye,” David says. “Sellers know they will sell their house and do nothing to make it look appealing or updated.” In July, over 55% of homes sold went for more than their asking price, according to Redfin.

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