During the financial crisis, it was widely reported that many young Americans had lost interest in homeownership. They wanted a car and an iPhone, yes, yet were supposedly indifferent to the purchase of property.
But fast-forward to 2013 and real estate specialists say people in their 20s and 30s never really lost their taste for homeownership. Or if they did, it was only fleeting.
"The American dream of buying a home is alive and kicking. The yearning to own a place is in our collective DNA," says Sid Davis, a veteran real estate broker and author of "A Survival Guiding for Buying a Home."
He says first-time homebuyers are still influenced by the same motivations that led their parents and grandparents into homeownership.
"People want a safe place to raise a family and a backyard where their kids can play. They want to be able to decorate and paint the house a color of their choice --without interference from a landlord," Davis says.
He says the current resurgence in interest in homeownership among young adults is linked to low mortgage rates and still-reasonable prices that many wannabe owners worry cannot last.
"Home values are now rising nearly everywhere, which creates a sense of urgency to buy soon," Davis says.
But there are also factors restraining young adults in their pursuit of a home. One is that many who've attended college or grad school are laden with student loan payments, which can severely constrain their capacity to qualify for a mortgage.
Here are a few pointers for novice homebuyers:
-- Focus on financial planning first.
For young buyers making an entry-level income, questions often arise about how much they're willing to spend on housing versus other financial priorities, says Leo Berard, charter president of the National Association of Exclusive Buyer Agents (www.naeba.org).
"It's hard for people of all ages, but especially for young people, to balance their current desires for a great house with future plans that involve money, like traveling abroad or starting a family," Berard says.
Given the surge in foreclosures in the recent past, real estate agents and mortgage lenders are less likely than before to encourage buyers to max out their home loan eligibility. And buyers of all ages fear the implications of taking on too much debt.
"You don't want to be 'house poor.' So it's absolutely essential to project ahead for your money needs," says Berard, who encourages buyers to define their money goals before setting out to shop for a home.
Are you unsure how to go about conducting a financial analysis? In that case, you might benefit from a few hours spent with a trusted accountant or financial planner. One source of referrals for fee-only financial planners willing to work on an hourly basis is through the Garrett Financial Planning Network (www.garrettplanningnetwork.com).
-- Look at property alternatives before picking a home.
Realtors who work with first-time buyers say that many -- including those living in small apartments -- are often so wowed by the first property they visit that they're prone to making a hasty choice. But until they've considered alternatives in the same or nearby neighborhoods, Berard says it's smart for them to keep their options open.
Imagine you're focused on a townhouse with a terrace in a brand-new gated development on the western side of a likeable suburb. Before you bid on that townhouse, however, you might wish to investigate what your money would buy in a detached dwelling on the eastern side of town where the yards are larger.
The benefits of comparison shopping may seem obvious. Nevertheless, many homebuyers do less of it than do car buyers, Berard says.
-- Do a comparative sales analysis before you bid.
To price their properties correctly, it's long been common practice for home sellers to rely on their listing agents for a review of recent sale prices in the neighborhood where they're selling. But Davis says it's an equally good idea for homebuyers to do a review of recent sales -- ideally for deals that have closed in the prior six months.
"The more recent the sales data, the better," he says.
Are you seeking to buy in an area where few similar homes have sold lately? If so, you may need to rely on comparable sales of dissimilar homes in the same neighborhood.
"Even if the houses are all different in architecture, you still can at least compare them on a price-per-square-foot basis," Davis says.
Besides examining comparable sales, he says that homebuyers should get a grasp on overall market trend for the neighborhood before bidding.
"Ask your agent to look at 'days on market' for the area. If it's taking longer for homes to sell, that could indicate that demand is dropping and vice versa," Davis says.
-- Allow sufficient time for a professional home inspection.
Are you a young homebuyer who wants to live in an established neighborhood where properties are more than 10 years old? If so, Berard says you should be doubly sure your offer is conditional on a thorough home inspection that can detect any serious flaws or structural problems with the property you've selected.
"As young buyers, you should be especially concerned that you've caught any defects that would be exceptionally costly to fix. If your inspector finds serious problems, you'll need an escape hatch," Berard says.
(To contact Ellen James Martin, email her at email@example.com.)