Are you a first-time homebuyer struggling to find a home to purchase? Maybe the home you were interested in sold before you had a chance to make an offer. Maybe you've made an offer on a house, but you lost to an all-cash offer. Sound familiar? It's just plain frustrating. So what's happening in the housing market that's making it so difficult to buy a single-family starter home? Read on to learn what steps you can take to find a home to buy.
- Homes selling so fast, you don't have the opportunity to make an offer
- You make an offer but lose to an all-cash offer
- Few starter homes available
- Limited amount of new construction
Unfortunately, you can't avoid competition as you look for a home. This includes other buyers, like yourself, and investors too. According to a recent study, investor activity has reached an all-time high. They swoop in, buy single-family starter homes then... rent them out to folks like you. With an approximate 3% annual increase in rent, you're faced with spending more and more on rent and saving less towards a down payment.
Investors are part of the home buying landscape and we need to accept they aren't going anywhere. With that in mind, there are certain markets you might want to avoid. These markets have the highest investor activity and include Detroit, Philadelphia, Memphis, Long Island, Oklahoma City, Atlanta, Des Moines, Baltimore, Camden, and Cleveland. Buying outside of these areas might not be convenient or possible, but now that you know they're saturated with investors, you might consider leaning towards a rental for the time being.
On the other hand, markets with the least amount of investor activity include those states west of the Rockies, cities like Ventura, Boise, Oakland, San Jose, and Sacramento. Safe to say, it's going to be easier to purchase a single-family home in these areas.
Many people buy homes to rent them out for profit, as seen with the Airbnb craze. Once again, this type of investing limits the number of homes on the market. Various cities, including New York and Los Angeles, have created rules that limit the number of days a property can be rented as well as the type of property. This action may expand into other cities which may slow down the trend and giving buyers more of an opportunity to find a home to purchase.
Solutions to Finding a Home
So, how are you going to find a home to purchase? You might consider working with a different real estate agent. Agents have different approaches to finding homes and different contact bases (ex. pool of potential sellers). It might take some time to find a house but, along the way, your agent might find a rental with an option to purchase. If you end up renting a house without the option to buy it, have patience. Rent for a year then consider talking to the landlord about buying it.
Another option is to keep your eyes open for "for sale by owner" signs in your desired neighborhood then call your agent right away. These sellers may not want to list with an agent but they may not have a problem working with a buyer who's represented by an agent.
- Rent to own
- For sale by owner
- Reach out to friends
- Buy a duplex
Consider buying a duplex. This give you the opportunity to live in one unit while renting out the other one. When you finally find a single-family home to purchase, you can rent out the unit you were living in and generate more income or you could sell it.
According to economists at a recent NAHB International Builders' Show, townhouse builds are up 24%. This becomes an affordable homeownership option for many first-time buyers. Talk to your real estate agent to see what's available in your area.
Be vocal about the fact that you're searching for a home to buy. Take advantage of every opportunity to talk to those around you about your desire to find a home. You never know when a friend of a friend of a friend might know someone who's considering selling their home.
In today's market it can be difficult to find a single-family home to purchase. If you do find one, you may lose out to someone who makes an all-cash offer. Don't give up hope. There are options to improve your chances of finding a home. You might want to consider renting a home with the option to buy, buying a duplex, or looking for "for sale by owner" properties. Talk to your real estate agent about homes for sale outside of your preferred area to increase your chances of finding a home. It may take some patience, but your dream of owning a home can become a reality.