First-Time Buyer? Prepare For An Uphill Battle!

Thanks to an improving job market, low mortgage rates, and record apartment rents, Millennials may finally be ready to buy. One problem: Will they be able to?

The number of available homes in the lower-price market is extremely limited. Inventory fell 8.2% in January from a year earlier for properties priced below $250,000, according to data from the National Association of REALTORS®.

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If you’re planning to buy, expect steep competition this spring. An index by Redfin that measures requests for property visits rose in the first two months of the year to its highest level since the brokerage began tracking such data in 2012.

“As soon as a house hits the market, it will be eaten by the huge demand appetite,” Nela Richardson, Redfin’s chief economist, told Bloomberg.

First-time home buyers in February dropped to 30% in February, down from 32% in January but more than the 29% share a year ago, according to NAR.

“Affordability is a challenge this spring,” says Doug Duncan, Fannie Mae’s chief economist. Potential home buyers “would have gotten their credit in shape and they’ll have a job. But they will be frustrated because, in their market, there simply won’t be affordable homes.”

To make matters worse, investor sales have been trending up in recent months, which could add to first-time buyer woes. Investors usually pays all-cash for their home purchases and compete in the same price bracket of homes.

“Already facing affordability issues, this competition at the entry-level market only adds to the roadblocks slowing first-time buyers,” says Lawrence Yun, NAR’s chief economist.

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