For the past few years, many prospective first-time homebuyers have been waiting for the market to turn in their favor. Now just may be the time.
Even with the rise in interest rates, August saw the first reduction in average home prices since 2016, according to research by Realtor.com, with the median listing price for a home dropping from $435,000 to $420,000.
However, before you begin reaching out to your sphere, be aware that a first-time homebuyer looks a little bit different from the industry stereotype — and so do the kinds of homes they are looking for.
More kinds of buyers
If you ask most agents to describe a first-time homebuyer, they may think of a young, starry-eyed couple that recently got engaged or married. Although the National Association of Realtors reports that 60 percent of recent buyers were married couples, 19 percent were single females, 9 percent were single males, and 9 percent were unmarried couples.
More types of properties
Although single-family homes account for the largest percentage of first-time homeowner purchases, it’s not unusual for today’s first-time homebuyers to look for different kinds of properties. The vision of a “starter home” can look different depending on the buyer’s perspective.
For some, the reason for this shift has to do with affordability issues. According to the National Association of Realtors (NAR), 37 percent of first-time homebuyers have student debt, with a typical balance of at least $30,000.
During the red-hot market of the pandemic, many first-time buyers opted to purchase condominiums because even if condo prices surged to an all-time high, the average sold price for a condo was nearly $90,000 less than a single-family home.
For others, condos and townhouses not only offered buyers the ability to have the privacy and equity of owning a home — they came with amenities like community pools and gyms and fewer responsibilities — someone else may mow the lawn.
To find out how to best serve today’s first-time homebuyer, you need to help them understand what they really want and need in their purchase.
Discover the buyer’s wants, needs and why
To help discover what kind of home would best fit your potential first-time homebuyer’s personality and lifestyle, get curious.
There will be some non-negotiable needs — say, a yard if your client has a bull mastiff. But you might discover that there are some interesting “wants” on their list as well. If a first-time buyer says that they want a house with a three-car garage, ask “why?” It may be that they over-estimate their need.
If they thought they wanted to fix up an old VW Bug on the weekends to resell for extra cash, maybe they’ll discover that the cost of that extra garage space negates any profit on in the used-auto market. Understanding the why can help you understand what’s truly important to your client and their home search.
We recommend having your client ask themselves the following questions so that you can match them with the ideal property:
- What do I want my home to be close to? What do I want my neighborhood to be like?
- How much space do I need? What do I need that space for?
- What is most important? Location or size?
- Would I be interested in a fixer-upper?
- What kind of property should I buy?
- Would I be interested in new home construction?
- What features do I need? What amenities do I want?
- What does my home have to have now? What does it have to have the potential for?
- Of all my wants and needs, which are the most important?
The answers to these questions will help your client understand what they are looking for. You’ll also gain some clarity on the priorities that will guide your service.
Helping today’s first-time homebuyer find the perfect fit is all about finding out what makes them unique — and finding the perfect place for them to feel at home.
April Murphy is the Director of Publishing at Keller Williams Realty, Inc. She and her team research and collaborate with Gary Keller and Jay Papasan on their bestselling books. Their next book, a revised and expanded edition of the homebuying guide Your First Home, releases in September 2022.