- Today’s housing market can be a challenge for first-time buyers with inventory and affordability not in their favor.
- Experts say that the number of first-time homebuyers is likely to shift in the next year.
- Sit down, and go through the entire homebuying process with millennial first-time homebuyers before you even look at houses.
Millennials are entering their prime homebuying years. This, coupled with job gains and rising household formations overall, is leading many millennials to enter the housing market for the first time — albeit with trepidation.
Today’s housing market can be a challenge for first-time buyers, with inventory and affordability not in their favor.
You see it all over the news, and as those younger millennials who have attempted to buy homes in hotspot cities such as Denver or Portland can attest, there is rhetoric of hopelessness that abounds.
It goes something like this: “You have to rent for over a decade,” “Buying a home is really an outdated American dream” or “You’ll never be able to afford a home in the city!”
As real estate agents know, this negative outlook has had an effect on the number of millennial first-time homebuyers we’ve been seeing in 2016 in major cities; however, experts say this trend is likely to shift in the coming year, with more first-time buyers entering the market, almost all of whom are millennials.
Many have a strong desire to own given that they are entering their 30s and perhaps thinking of starting a family.
With this in mind, I wanted to find out exactly how real estate agents can also shift their mindsets to better understand and work with millennial buyers.
Here are the top three tips from agents and brokers who work with first-time buyers.
1. Set and continually manage expectations
Libby Levinson, a real estate agent with Kentwood Real Estate Cherry Creek, has worked with several millennial first-time homebuyers and says the very first step an agent should take is to sit down with them and thoroughly explain every step of the transaction before looking at any properties.
This helps to set expectations for the general process. Preparing ahead of time can help you and your clients avoid surprises during the transaction and provide a clear roadmap from which to work.
2. Coach them on the long-term
Often, a millennial first-time homebuyer cannot afford what they think they want.
“I try to show my first-time homebuyers the value of property ownership in the long run and explain to them how a less-expensive home now can easily be parleyed into bigger, better properties later,” said Taylor Wilson, a real estate agent with Keller Williams and chair of DMAR’s Young Professionals Network.
“In other words, not buying the dream home now is not a reason to keep renting.”
In addition, it’s a good idea to advise a millennial buyer to think about what a comfortable monthly payment would be for them, long term.
Typically, first-time buyers will get pre-qualified for their max amount, but that might not be what they are comfortable spending on a month-to-month basis.
3. Be positive
If you’re a millennial who has paid any attention to the news over the last several years, it’s easy to feel discouraged when it comes to buying a home.
Salaries can’t keep up with the standard of living, and many feel trapped in a vicious cycle of pouring all of their money into rent each month. Forget about a 20 percent down payment on a home.
But that’s not always the case. What millennials might not know is that they actually do have options when it comes to financing.
Colorado, for example, has the Colorado Housing and Finance Authority (CHFA) that offers a wonderful program for first-time homebuyers.
Wilson said, “I have had first-time buyer clients with no money down to clients who have parents that will put 20 percent down — every situation is different. We can’t let someone’s perceived lack of down payment deter them from buying.”
Have you noticed differences between working with millennial first-time homebuyers versus other first-time buyers? Please comment below, and share your thoughts!
Ann Turner is the chief executive officer at the Denver Metro Association of Realtors (DMAR). You can follow DMAR on Twitter at @DMARealtors.