BONUS MATERIAL: GET OUR 7 COSTLY MISTAKES HOME BUYERS MAKE GUIDE.
The housing market has cooled significantly from the ultra-competitive conditions of 2021-2022. As demand softens, prices stabilize and supply increases, the door has opened for first-time home buyers.
No longer squeezed out by deep-pocketed investors and fast-moving bidding wars, new buyers can take advantage of these ideal conditions.
Here are 4 reasons why 2023 presents an opportunity for first-timer home buyers:
1. Less Competition From Investors
During the frenzy of the pandemic housing boom, deep-pocketed investors like Wall Street firms and large-scale landlords were buying up homes in droves. From Q2 2020 to Q2 2022, investors purchased nearly 1 in 5 homes sold in the U.S. Most being all-cash deals. This drove up prices and intensely squeezed out regular home buyers.
Now as the market cools, analysis shows investor purchases dropping rapidly. Their share of home sales fell from 19.2% in Q2 2022 to just 11% in October 2022. We predict investors will purchase around many fewer homes in 2023 as the numbers hurt their returns.
This pullback by large investors opens more inventory opportunities for starter home buyers. You have less mega-capital competition.
2. Mom-and-Pop Investors Are Backing Off
Individual real estate investors thrived during the hot pandemic housing market as cheap leverage and soaring values allowed them to buy low, renovate, and sell or rent high.
But as rates rise and bargains disappear, the numbers for fix-and-flip or fix-and-rent projects are much less favorable. It simply costs more to finance properties while price growth has stalled. This squeeze on profit margins is forcing many smaller-scale investors to pause purchases as well.
Some bought second homes, or vacation homes for short-term rentals. That market is slowing down and getting outlawed even in some markets.
3. The Downsizing Market Softens
Many empty nesters are choosing to hold off on selling their family homes and downsizing because the higher interest rates on a new property would offset any reduction in housing costs from downsizing. They don't want to trade their 3-4% mortgage for a 6-7% mortgage.
That also means fewer boomers listing the type of reasonably priced, 4-bedroom suburban homes perfect for move-up buyers. Until rates moderate, this downsizing stall will persist. Everyone is in holding pattern.
4. Rents and Inflation Remain High
The median national rent is at $2,052. Over two years, rents have grown by
Plus, inflation hovering around 3.6% - 8% impacting everyday costs like groceries, gasoline, childcare and utilities. These mounting household expenses make homeownership more attractive financially. Owning means being able to lock in a monthly cost.
The Verdict? Jump Into Homeownership Now
“When The Time Comes To Buy, You Won't Want To.” Walter Deemer
Is now the best time to buy? It depends on you, your situation and your timing.
But, for first-time home buyers, the playing field has leveled substantially without having to compete with waves of all-cash corporate investors. Small-scale landlords are also pulling back as the numbers get tighter. And Downsizers are waiting.
The door might not be wide open, but there’s a crack and a chance to get your foot in.
Of course, mortgage rates are higher than the past two years. But they remain relatively moderate at 6-7% fixed rates, with room to retreat.
For those ready to buy their first home, stop waiting and letting obstacles discourage you. Capitalize on this opportunity.
"The best time to plant a tree was 20 years ago. The second best time is now." - Chinese Proverb
And when you’re ready here are 4 ways we can help you right now…
1. Ready to go look at a home? - just hit reply and let us know what you’d like a tour of and when. Or just click the ‘Schedule Showing ‘ on PersingerGroup.com
2. If you’re a first-time homebuyer - get your free guide, 7 Costly Mistakes Home Buyers Make, visit http://costlymistakeshomebuyersmake.com
3. If you’re SELLING your home - get access to our Get Sell Ready guide and checklist. It will show you how to get your home ready for sale without spending a fortune or wasting your nights and weekends updating and remodeling your home. http://getsellready.com
4. Start a Smart Moves Conversation with us… get clarity about what to do next, get your questions answered, your concerns are taken care of, and an action plan customized to your timeline. Schedule a call at http://smartmovescall.com or start a chat at http://m.me/persingergroup
