With a law degree from Georgetown University, Rory O'Sullivan expected to be further along the economic spectrum by age 29. But his hefty load of student debt, coupled with his modest salary, means he may have to wait to actualize his desire to buy a home of his own.
"Our generation is optimistic, but we're in a pretty big hole. We've been struggling and stumbling since the dot-com bubble burst in 2000, and then we got hit by the recession, so we're not in a position to take on a big mortgage," O'Sullivan says.
As policy and research director for Young Invincibles, a nonprofit group promoting the interests of "millennials" -- young adults between the ages of 18 and 34 -- he's acutely aware of the economic challenges facing many in his age group. As he notes, this population cohort is saddled with more than $1 trillion in student debt and faces a high level of unemployment and underemployment.
"We've had to lower our expectations. But we're still optimistic we can reach the American dream," O'Sullivan says.
Despite the economic challenges facing them, many millennials at the older end of the age range can now afford to buy real estate -- but only if they're able to obtain a place for a very reasonable price, says Art Godi, the co-owner of a real estate brokerage that caters to young adults.
Godi, a former president of the National Association of Realtors (www.realtor.org), says the real estate hopes of young adults are no different than those held by their parents' generation at the same stage of their lives.
"They want the same good neighborhoods that are safe and close to good schools for their children," he says.
Having come of age during tough economic times, young adults are more conservative than their parents were in selecting the right starter home, according to Godi, who entered the real estate field in 1961.
"Because jobs have been so insecure -- and still are -- young people are used to belt tightening. They're a lot more cautious about how much they spend and the credit card balances they run up," he says.
On the plus side, this cautionary approach to financial matters has made many millennials very aware of the importance of maintaining a good credit score, which helps make them eligible for favorable mortgage financing.
"Many young buyers have very, very good credit scores," Godi says.
Although all homebuyers want a good deal, he says millennial purchasers -- with modest incomes and little savings for a down payment -- need an especially reasonable one. He advises those trying to buy their first home to think strategically. Here are a few pointers:
-- Target once overpriced homes that were converted to rentals.
Ashley Richardson, a real estate agent affiliated with the Council of Residential Specialists (www.crs.com), reflects on a pattern of behavior she's observed among some sellers whose inflated sense of their home's value causes them to overprice their property when it's first put up for sale.
"Because they shot too high, their house just sits and sits. Eventually, they take it off the market and try to convert it into a rental. But they soon get discouraged with renting and throw in the towel on that, as well," Richardson says.
After going through the trauma of renting, many homeowners put their property back on the market again -- this time for a faster sale at a more reasonable price -- and are much more willing to negotiate than they were the first time, Richardson says.
If you're a young buyer willing to purchase a house that's served as a rental unit, you could get a discount of as much as 5 percent off its market value, she estimates.
-- Consider a home with an out-of-date decor.
Money-tight homebuyers -- including first-timers -- may wish to consider a category of homes a notch above the fixer-upper. Typically, these are overall well-maintained properties with solid electrical and plumbing systems. But their owners, though conscientious in some respects, have neglected the cosmetic aspects of the interior decor, which may force them to sell at a price well below market value.
"If the kitchen appliances are still functional, some homeowners just hang onto them indefinitely -- even though they're in dated colors like avocado or gold. They also hang on to dated bathroom tile colors and fixtures," Godi says.
But he cautions against taking on a home that needs major infrastructure improvements.
"Most millennials are a lot more proficient at the iPad than with a hammer and nails. They're not very handy," Godi says.
He recommends a thorough inspection to determine whether a home has fundamental problems -- such as a crumbling foundation. These are far more costly to fix than an unappealing decor.
-- Search for highly motivated sellers.
When it comes to real estate -- as with many financial transactions -- time is money. Sellers who want or need to make a hasty move are generally more willing to let their property go for a bargain price.
As a young, first-time buyer searching for an affordable home, it's important to realize that you probably won't need to pry or do anything sneaky to determine the motivations of sellers, says Tom Early, a past president of the National Association of Exclusive Buyer Agents (www.naeba.org).
"In some areas, sellers still broadcast their desire for a quick sale in the ads put out by their listing agents. Perhaps their ads will read: 'Seller Motivated' or 'Must Move Quickly,'" Early says.
If the ads don't reveal the sellers' motivation, a few casual inquiries placed by your real estate agent -- to the listing agent -- could do so.
Early says a solid buyers' agent can be especially helpful in assisting first-time buyers to shape a bid in keeping with the sellers' timing preferences.
"Flexible buyers who've been preapproved for a mortgage and can move quickly --assuming that's what the sellers want -- are in an exceptionally strong position to nab a good deal," he says.
(To contact Ellen James Martin, email her at email@example.com.)