In the era of COVID-19, homeownership has new luster. While once many young adults prized the flexibility and mobility of a rental, now they place a higher premium on acquiring a spacious place with a piece of land where their kids (or dogs) can romp.
Buried in a newly released report from SatisFacts (satisfacts.com), which tracks rental markets for investors through surveys, is the stunning statistic that nearly 36% of current tenants are unlikely to renew their leases. Some simply can’t afford their payments any longer and expect to double up with family. But many others -- who’ve kept their jobs -- feel a restless desire for ownership.
Take the case of a Manhattan couple of finance specialists in their 30s now paying a hefty rent for a tiny two-bedroom near Penn Station. Once these millennials were dazzled with the excitement of a New York lifestyle. But after so many friends fled to outlying areas and their gym closed, they declared their intention to exit their building as soon as their lease ends in September. Their current plan? Relocate near family in California or Maryland and buy a house big enough for two work-from-home offices.
Ashley Richardson, a longtime real estate agent for the Long & Foster company in the Baltimore suburbs, doesn’t know the couple in this real story. But she says their now fervent desire to end their years in a rental apartment is a common sentiment among young adults who’ve endured more than three months of COVID-19 restrictions.
“As a group, millennials are very sociable. But the pandemic convinced them they really don’t like being cooped up in an apartment building with lots of other tenants. For safety, they want to own at least a little bit of outside space -- in either a detached house or a townhouse,” says Richardson, who’s affiliated with the Residential Sales Council (crs.com).
Despite the economic challenges facing them, many millennials at the older end of the age spectrum 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 family-owned real estate brokerage that caters to young adults.
Having come of age during tough economic times -- and now enduring another recession -- young adults are more conservative than their parents were in selecting the right starter home, according to Godi, a past president of the National Association of Realtors (realtor.org).
“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. He advises first-time buyers to think strategically. Here are a few pointers:
-- Don’t rule out a home with an out-of-date decor.
Money-tight buyers -- including many novice buyers -- 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. Thus, they may be forced to sell for a price below market value.
Godi says young buyers willing to overlook a dated kitchen or bathrooms can sometimes get a favorable deal on a property that they’re willing to improve themselves at a later date. But he cautions against taking on a home that needs major infrastructure improvements.
-- Focus on formerly overpriced homes that were converted to rentals.
Richardson 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 owners put their property back on the market -- this time for a faster sale at a more reasonable price. Worn down by the long saga, they’re much more willing to negotiate than they were the first time.
-- Screen for 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 very reasonable price.
As a young, first-time buyer searching for an affordable home, you probably won’t need to pry or do anything sneaky to determine the motivations of sellers, says Michael Crowley, a past president of the National Association of Exclusive Buyer Agents (naeba.org).
“Most real estate agents know lots of local people in the same field. Because of that, it shouldn’t be hard for your agent to find out why a house is being sold and how quickly the sellers want or need to move. Maybe the owners are getting a divorce and want the home sale over with. Or maybe they must move for a new job in just a few short weeks,” Crowley says.
He says a dedicated buyers’ agent can be especially helpful in assisting first-timers to shape a bid in keeping with the sellers’ timing preferences.
“Buyers who are pre-approved for a mortgage and can be extremely flexible on their move-in date are sometimes in an extraordinarily good position to grab a good deal,” Crowley says.
(To contact Ellen James Martin, email her at email@example.com.)