Cash Offers Are Blocking First-Time Buyers

I am seeing cash offers win a few bidding wars however that does not always need to be the case. Sure Cash is King as the saying goes however my sellers have accepted mortgage backed offers over cash and my buyers have won bidding wars for property with mortgaged offers. If there is a will, there is a way. Sorry, another old saying…

Anyway, I would say corporate offers for property are hurting the chances of a first time buyer to purchase a home more than cash offers. I will write more on that issue in next months blog post. 

The following article was posted on the Realtor.com website and is a very interesting read.

 

Bidding wars and high home prices are increasingly sidelining first-time home buyers. To make matters more challenging, they are also up against investors willing to pay cash for a home, which they are typically unable to do. They are losing out on homes facing multiple offers and missing some of the lowest mortgage rates of all time—under 3%.

But “the American dream [of homeownership] is not dead,” Jessica Lautz, vice president of research at the National Association of REALTORS®, told realtor.com®. “It’s hard for first-time home buyers in the market right now to compete.”

The median home list price rose 13% annually in June, reaching a record high of $385,000, according to realtor.com®’s data. Rental prices reached a median of $1,575 in June. Young adults are facing high rents that are making it more difficult to save for a down payment.

Meanwhile, the percentage of first-time home buyers fell to 31% in May and June, which is the lowest level in more than three decades, according to NAR research.

“For this housing cycle, many first-time buyers probably missed the boat,” Ali Wolf, chief economist of building consultancy Zonda, told realtor.com®. But “housing is a cyclical business. So while it feels like prices will only go up forever, the market will change. It always does.”

Once more homes are listed, first-time buyers may face less competition. Some hope that is starting to occur: The number of new listings on realtor.com® rose 9% in the week ending July 24 compared to the previous year.

“We may see first-time buyers have better footing,” Lautz said.

Some first-time home buyers may be better situated to purchase a lower-priced condo rather than a single-family home, Wolf said. Some would-be buyers also may want to consider either purchasing a fixer-upper or expanding their target area to try to expand their choices.

“To the first-time buyers who feel like they’re never going to be able to own a home, be patient,” says Wolf. “Keep saving, keep a passive eye on the market, and watch listings. Be in a place where you’re ready to act fast if [the market hits] a soft patch.”