Starter homes are becoming increasingly popular due to the number of young adults moving into the housing market – primarily as first-time homeowners and buyers. Due to their size, such properties typically carry significantly lower price tags than median-priced homes and may be perfect for buyers looking to keep their costs down, according to Trulia. However, with the demand so great, starter homes typically spend very time on the market and often attract multiple bidders.
Digging into the numbers
Research shows the challenges shoppers fixed on lower-priced housing options are likely to encounter. Through the end of the first quarter of the year, starter homes made up just 22.4 percent of listings, down from the previous 22.8 percent on both a quarterly and annual basis. However, nearly 29 percent of all home searches were for these properties, and given the paucity of available properties – of all types – in the market generally, it’s reasonable to expect there will be ongoing competition for those listings.
Conversely, more than half of all homes up for sale were considered “premium” priced, meaning they were quite costly in comparison with national medians, but only about 2 in 5 home searches were for these more expensive listings.
What can be done?
As a consequence, it might be wise for people who are thinking about getting into the market now with an eye toward locking down a low-priced home to wait a little while longer, building their savings so they can afford a mid-priced home instead, according to NerdWallet.
A starter home search could take quite some time anyway, for instance, but those who can lock in a mortgage deal sooner than later will also likely get a much better rate than someone who waits even six more months to move into the market. In addition, many young adults buy starter homes to be just that, a start on a long journey in homeownership. Those who are planning to trade up in a few years, or even several down the line, might be wiser to simply skip a step and avoid going through the home buying and selling aspects of the real estate sales process.
Of course, anyone getting into the industry would be wise to talk to a real estate professional about their options based on where they’re looking to live, what they can afford, and what their long-term homeownership plans may be. Agents will be able to give clients the benefit of years of experience and help them make the most informed decision possible.
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