During the worst of the pandemic, there were numerous young adults of home-buying age who were so petrified by the competitive real estate game that they waited for many months on the sidelines.
These people were hearing horror stories about ferocious battles over property in prime neighborhoods. If aced out by other bidders, they worried their egos would be badly bruised,” says Mark Nash, a real estate analyst and author of “1001 Tips for Buying & Selling a Home.”
But many of these holdout millennials -- born between 1981 and 1996 -- are now finally entering (or reentering) the market, which is becoming slightly more balanced in their favor.
“Rising inventory and moderating price conditions are bringing buyers back to the market,” says Lawrence Yun, chief economist for the National Association of Realtors (nar.realtor).
Another reason more millennials are now entering the fray is that many are feeling economically empowered, says Danielle Hale, the chief economist for Realtor.com, the national home listing service. She cites rising wages and declining unemployment to explain greater buyer confidence.
Still another factor currently driving more millennials into home-buying is the quest for a larger living space. This desire is especially intense among those who’ve grown accustomed to remote work during the pandemic and seek more spacious home offices.
A recent survey done by the Pew Research Center (pewresearch.org) indicates more Americans currently say they’d prefer to buy in a community with big houses, even if that means grocery stores and other amenities are miles away.
Although many holdout buyers are now active in the market, most are proceeding with some degree of financial trepidation due to high housing costs.
“No one wants to be so house-poor they can’t cover the cost of child care or health insurance. Nor are they willing to be so limited on cash flow that they can’t go out to a movie or a nice restaurant for dinner,” Nash says.
Here are a few pointers for buyers:
-- Limit yourself to your financial “comfort zone.”
Merrill Ottwein, a real estate broker and former president of the National Association of Exclusive Buyer Agents (naeba.org), cautions buyers of all ages against taking any mortgage that feels uncomfortably large.
“Nowadays, lenders are very strict. But it’s still possible to find mortgage companies that will let you borrow more than you should. It’s up to you to create a realistic budget and limit your loan amount,” says Ottwein, a Coldwell Banker broker.
“Fortunately, today’s young buyers are mostly very financially conservative. They were still in school more than a decade ago when the Great Recession hit. But they can remember how easily you can lose a house to foreclosure if you overshoot your budget,” he says.
-- Search for a place where you could house a roommate or two.
Unlike older buyers, many young purchasers are comfortable with the notion of sharing their space with roommates. After all, that’s what they did in a college dorm or a rented “group house.”
“For lots of young folks, it’s a huge plus to have a roommate who pays rent and helps offset their mortgage expenses,” Ottwein says.
What kind of property is most attractive to renters?
Ottwein recommends you seek a home with a bedroom suite that includes a private bath. A separate, outside entrance to the suite would be ideal. Also, a place near a college campus could be an especially good bet.
-- Seek out an energy-efficient home.
After taking ownership, many first-time buyers are stunned at the size of their outlays for upkeep. The scope of their energy costs also comes as an unpleasant surprise.
Obviously, many costs associated with homeownership, such as taxes and insurance, are unavoidable. But savvy home shoppers can more easily contain their energy costs by selecting an energy-efficient property that’s well insulated and has double-pane windows, says Sid Davis, a longtime real estate broker and author of “Your Eco-Friendly Home.”
He suggests that before agreeing to buy a particular property, you review at least six months’ worth of utility bills from the current owner. Also, make sure the home inspector you hire gives you an estimate of your utility costs going forward.
“The inspector should tell you about the quality of insulation in the property, and energy ratings for the windows. Double-pane windows can save you as much as 15% to 20% on your utility bills compared with single-pane windows,” Davis says.
-- Remember to factor lifestyle into your home selection.
“A great home purchase isn’t just about lots of square footage and lovely features. It’s also about finding the right location to support a lifestyle that’s fun and fulfilling,” Ottwein says.
(To contact Ellen James Martin, email her at email@example.com.)