First-time home buyers are making big waves in the housing market lately. They were credited as the reason behind the 3.2 percent month-over-month gain in existing-home sales last month, according to the National Association of REALTORS®. Sales to first-time home buyers topped a 34 percent share in September, the highest in more than four years. What’s more, industry analysts are predicting their share to only strengthen over the next year. Is your business ready?
“These buyers face more challenges than the buyers who have dominated the market for the last five years,” writes Jonathan Smoke, realtor.com®’s chief economist, in his latest column at realtor.com®. “First-time buyers are more than three times more likely than a repeat buyer to say that they lack the funds for a down payment. Likewise, they are 2.9 times more likely to be held back because they are subject to the terms of a lease. And they are 2.7 times more likely to say that they need to improve their credit score.”
From you, they may need a lot of advice, education, and support. Smoke suggests supplying first-timers with information on down payment options and the importance of credit scores.
For example, surveys show that many first-time home buyers believe they need 20 percent down to buy a house. In fact, the average down payment in the U.S. through September is 11 percent. In recent months, lenders have offered up loan options that require just 3 percent down of the home’s purchase price, and in some cases, even just 1 percent down payment loans. Read more: Smaller Down Payments Lure More Buyers
Also, educate your first-time home buyers about the importance of credit scores. Offer up resources, if needed, on how to improve their credit scores so they can qualify for the lowest mortgage rates. Here’s a handout you can provide: How to Improve Your Credit
More than half – 53 percent – of potential home buyers say student loan debt is hindering their chances from buying a home, according to the annual housing survey conducted from NeighborWorks America. But survey researchers say that better awareness of down payment assistance programs and student loan debt counseling may help these potential buyers. The survey found that 71 percent of Americans were unaware or not sure about down payment assistance programs; 77 percent of those with student debt said they had never heard or were unfamiliar with loan counseling programs from nonprofits.
Source: “Top Tips for the Coming Tsunami of First-Time Home Buyers,” realtor.com® (Oct. 20, 2016)