While experienced real estate investors can’t get enough of the current market, many home buyers, including the massive pool of millennials, are still stuck on the fence. So what’s keeping them there, and how can they be helped off the sidelines so that they too may buy a home?
There are a variety of perceived issues keeping many would-be home buyers in the stands. So what are they, and how can these challenges be overcome?
Title Concerns
Many individuals are afraid to buy property because of title concerns. Beyond the bank orchestrated robo-signing scandal which may have impacted far more than a million homes, there have been numerous title scams in the news. This is absolutely something for home buyers and real estate investors to be aware of, given how costly and devastating the consequences can be. However, this shouldn’t be an excuse to forego all the benefits of homeownership. Just be wise. Order title searches early in the process so that potential issues are spotted, and never buy a property without title insurance.
Access to Mortgages and Financing
So much media flap has been made about how tough home loans and investor mortgages are to get, many don’t even want to attempt it. This is incredibly sad when there are so many financing options for home buyers and investors. 100% LTV loans are being advertised on TV again, and it probably won’t be long before we see 125% LTV loans making a comeback. Interest rates are so low that far more individuals can qualify to buy homes than before, and many won’t have this opportunity again. Then there is transactional funding, hard money lending, and seller financing, which can be used with low credit scores. It might take a few phone calls and emails, but there are billions of dollars out there just waiting to be used. You can get financed if you try.
Uncertainty over the Future of the Market
Surprisingly, uncertainty over the future of the U.S. real estate market and property values continues to hold many qualified buyers back. Some media outlets have enjoyed spinning controversy to catch attention with stories about how the market has recovered so quickly. However, after looking at the data, it’s clear that the only direction for most U.S. property is upwards for the foreseeable future. There will absolutely be fluctuations in the future but providing investors and buyers recognize them, and account for them, buying now will still be a powerful move for reducing housing costs and building income and wealth.
Down Payments
Many U.S. home buyers and investors may be low on savings after years of leaner economic times, but making assumptions about how much is needed, and how short you are without checking, is just self-sabotage. Again; there are 100% financing and no down payment loan programs, in addition to around 2,000 down payment assistance programs to help with whatever you may need. A little investigation might make many realize that homeownership and investing is easily within their grasp.
Lack of Inventory
One of the top complaints of many real estate investors recently has been a lack of inventory to choose from, or at least a lack of viable deals. However, note that quite a bit of new housing stock has been put on the market in 2015, giving buyers more choices. This is in addition to the vast pool of shadow inventory and off market real estate that isn’t being publicly advertised, but which can be bought. Even though some may have been spoiled with house deals at 30% to 50% of their values in recent years, looking back in 5 or 10 years from now most will see how low property prices were, and will be kicking themselves hard, and probably for the rest of their lives if they don’t buy.
Affordability
Housing affordability is a rapidly growing issue across America. Zillow says renting is now twice as expensive as buying a home, and that is only going to get worse. While interest rates have remained low demand is pushing up home prices which is making it tougher for some to buy or rationalize buying now after seeing how low prices were. This too is only going to get worse. Serious buyers need to be ready to act and make offers in minutes of finding an attractive home, not days or hours. Others will have to look a little further afield to more suburban areas to find the value and low housing payments they need. However, not buying now is only going to make living more expensive, while buying and investing may be the only way for many to get and stay ahead financially over the next decade or two.
