Did you know? A recent study conducted by John Burns Real Estate Consulting found that 1 in 5 homes sold in the U.S. in 2020 were bought by investors. In other words, landlords ranging in size from institutional investors to “mom & pop” investors have been gobbling up properties to add to their real estate investment portfolios. Home shoppers are not only competing against each other in this market, but they are also competing against a large number of investors.
The challenge for first-time home buyers
Perhaps no other group of home buyers is feeling the effects of this current competitive housing market than first-time home buyers. In particular, first-time home buyers that have low down payments (i.e. less than 20%) are encountering significant headwinds with getting a property under contract. As expected, when the competing buyer has cash with no contingencies and is able to close quickly, most (if not all) sellers will accept the offer that provides the path of lease resistance.
If you are a first-time home buyer trying to compete in this housing market, there are a few strategies to consider. For starters, it is imperative that you have a team consisting of a local and knowledgeable real estate agent, a mortgage broker, & a real estate attorney. In addition, it is highly recommended that you save at least 20% of the home purchase price as down payment. If you are able to receive down payment assistance from a family member, that can help as well. Lastly, you will need to be able to act swiftly in this market. In some cases, this may even mean getting a property under contract sight unseen. It is important to remember that if you have a property under contract as a buyer, you are in total control of the transaction during the inspection period. It is during this time that you may assess whether or not to move forward with the purchase.
The American Dream of home ownership is becoming more elusive for many Americans. While this can be extremely frustrating for would be home buyers, it is important that a thorough plan is in place while maximum down payment strategies are employed. A general rule of thumb to remember is that home buyers can never have too much money saved for their home purchase. If a first-time home buyer is not finding any success during their home search, they should take this time to focus on building up their savings as much as possible.
Are you considering a home purchase in South Florida? We can help. Contact Live South Florida Realty, Inc. today!