Millennial home buyers on the rise in 2021

In the first half of 2021, we saw a surging demand from millennials starting families and planning to buy a home.

We know that millions of millennials were looking to buy a home from 2022 to 2025, but decided to make the move earlier than their original home buying timeline and started the process now.

I mean, with interest rates as low as they are, can you blame them? On top pf that, the rental market increased in rental prices more than the housing market did in equity. The demand for rental properties and lack of rental inventory also helped prompt these homebuyers to start the search faster when they did the math and realized it was more affordable to buy a home than rent, if in fact they can get into a house, again also due to inventory shortage.

This also happened during what is typically the hottest season for home buying in general so it made the surge even more obvious.

Where we are now

Heading into the fall, we usually see prices drop and the market slow down, but that hasn’t been the case. Buyers are disappointed to see that while prices have stabilized a bit, there are still multiple offers on homes and still going above asking.

Wise sellers are pricing the homes competitively to drive more buyers to submit offers, while we’ve seen other sellers overprice their homes only to see it stay stagnant in this market and have to drop their prices until they do in fact get an offer. By then, buyers think there is something wrong with the home when it’s been on the market over 3 weeks.

In the Oviedo market, a home doesn’t last longer than 7 days on the market.

Buyers waiting for the market to change

While the enthusiasm of those who have been shopping for a new home for awhile might fade, and we have definitely experienced buyer fatigue in this market, there are still tons of new buyers entering the market with down payments and closing costs ready to compete.

I’ve spoken to many prospective buyers that are waiting for a dip or a drop in the market and while I’m hopeful for them, the interest rates will go up if market prices dip. If that’s the case, home buyers will be spending more for a home due to the higher interest rate than locking into a home a little bit of a higher price with the low interest rates available right now.

Market Prediction 

The market shift people are waiting for isn’t what they think. Instead of a surge in prices, we’re going to see a stabilization of prices. Inventory isn’t coming quick enough through new construction and people that own houses don’t want to move unless they absolutely have to.

That has placed us where we are with low inventory, high demand, but the benefit of a low interest rate that continues to be the light at the end of this search for home buyers.

We don’t anticipate a full switch in the housing market until sometime in 2022 where it would be considered favoring buyers, but even if that is the case, it doesn’t guarantee locking in a low interest rate.

Most of us real estate professionals consistently predict the same thing. If the market softens next year, it’s just stabilizing, not dropping. We’re going to be in recovery mode for many years and until new construction and inventory opportunities open up in high demand markets, it’s not really going to change too drastically.

It is good to point out that while most major cities and suburban markets, especially in Texas, Florida and Tennessee have seen significant price appreciation due to COVID and relocations, some other major cities have had serious issues trying to sell, like New York, but people are slowly making their way back to the Big Apple.

While the real estate market has largely been hot across the U.S., local market conditions vary and will continue to do so. If you’re planning to buy or sell a property this year, give me a call so we can let you know what’s going on at a hyperlocal level.

So many questions when you’re looking to buy and sell a home, but there are many that should NEVER be asked…

These are 6 questions a Realtor should never answer and why:

1. Should I buy this house as an LLC, a trust, or an individual?

We are not attorneys or CPAs and should not speak beyond our area of expertise and licensure. 

It’s important to contact either one of these in order to get the best and most accurate response that would benefit you in your purchase. 

2. What is the racial makeup of this area?

Can you say “discrimination”?

Racial discrimination is illegal and Fair Housing says it’s a protected class:

The Fair Housing Act protects people from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities. Additional protections apply to federally-assisted housing.

Who Is Protected?

The Fair Housing Act prohibits discrimination in housing because of:
-Race
-Color
-National Origin
-Religion
-Sex
-Familial Status
-Disability

3. Are there a lot of families in this area?

Believe it or not, this is a Fair Housing violation. Cannot discriminate based on familial status. See #2

4. What do you think I qualify for?

Again, we are not lenders and not able to speak beyond our area of expertise or licensure.

We work with some great lenders we highly recommend, but we should never be giving numbers of what a buyer may or may not be pre-approved for. This is usually done by the lenders after having received paystubs, income, taxes, social security numbers and several sensitive documents and information that a real estate agent never needs to see. 

5. How is the crime rate here?

It’s illegal for us to discuss crime rates but you can have access to it through public records.

You can also a site for viewing registered sexual offenders: Florida’s Sexual Offenders and Predator Search

6. What are the taxes going to be for me in this house?

We cannot guarantee a tax rate because the current taxes on a house are based on the longevity of ownership and whether or not it was homesteaded. If a property is homesteaded it means the owners used the home as their primary residence. 

In Florida, we receive a Homestead Exemption which allows for primary residents to receive a substantial discount on their assessed value, lowering their taxes. 

There are so many factors that play into the assessed value of a home. New home ownership will trigger a reassessment for the new owners which can slightly or drastically change the current tax amount paid by past owners. 

We’ve seen buyers rely on the taxes the previous owners paid as what there’s would be only to see it double the next year. A real estate agent cannot properly assess what a home’s taxes will be. If you want more information, you can contact the county property appraiser. 

Are you looking to start your investment portfolio with real estate?

Small scale Real Estate investors are just as concerned about today’s market as home buyers. They’re facing the same high prices, even trying to get off-market properties.

48% of individual real estate investors see the investment market today as being worse or much worse than it was a year ago, according to a survey completed by RealtyTrac.

Flipping Homes

Even flipping homes is down compared to previous years because of much lower profit margins. Don’t let HGTV fool you. Flipping homes is not the game it was a few years ago with the housing prices where they are.

Distressed homes have had a great opportunity to sell this year for top dollar because of how desperate home buyers have become. As a result, it gave typical fix and flip investors less opportunity to purchase at a steal in order to renovate and resell for a profit.

On top of that, the cost of materials and labor is so incredibly high for home improvements, and that’s if you can find good hardworking contractors that are available.