Millennials and first-time home buyers: Start your engines

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Judy Boyle, Realtor®, RE/MAX

 

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Judy Boyle, Realtor®, RE/MAX www.judyboylecares.com [email protected] 508-561-7164

Okay, so you have been hearing it constantly over the past several years: There has never been a better time to buy a house. So why will 2017 be any different, you ask? The answer is simple… By the time you finish reading this article, the cost to buy a house has increased.

According to the RE/MAX New England 2017 Market Outlook Report, “increased activity throughout the last quarter has remained strongest among first-time, millennial buyers who are looking to settle down, get married and start a family.” A millennial buyer is defined by the National Association of Realtors (NAR) as a “twenty to thirty-something seeking an affordable, move-in-ready property that is transit-oriented and within commuting distance to a city.”

Until they are ready to buy a home, millennials are typically paying exorbitant rents (upwards of 37 percent of their median $76,000 income in urban areas according to the NAR), have high debt-to-income ratios, and minimal savings. Millennials do understand the value of a good FICO score, however, and for that reason they are able to obtain a mortgage according to the NAR.

Affordability is key across all New England markets and demand will remain greatest in price points below $300K in central Massachusetts where inventory is scarce, according to the Massachusetts Association of Realtors (MAR).

Even industry expert CoreLogic’s latest Home Price Index reports that home prices in Massachusetts have appreciated an average of 5.2 percent year-over-year for the past three years. Low inventory will most certainly drive this number higher in 2017.

Furthermore, as of this writing, BankRate.com reports that interest rates have climbed .87 percent since Oct. 12, 2016, from 3.62 to 4.18 percent. Should this trend continue, buyers need to heed the warning of the industry experts such as The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors who predict the rate will increase to 4.85 percent, if not more, by the end of 2017. So what does all this mean for first-time home buyers? The chart below illustrates what the same house would have cost last year and what it will most likely cost you next year.

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So, if this information has convinced you as a first-time, millennial buyer that it is time to start your engine, it is critical that you to take these two important steps right after the new year since new inventory will begin to appear soon thereafter:

  • Hire a local Realtor® who specializes in first-time homebuyers. Take your time and interview a few; you will want to feel comfortable with this person as you will be spending a lot of time with him or her. Your agent should anticipate your questions and know the market in your desired geographical area. Ask for references; read their testimonials. Ask how he/she overcame challenges (and there will be some). Sure there are some great online resources but nothing will replace the expertise of an experienced buyer agent who works exclusively for you…at no charge.

 

  • Obtain a PREAPPROVAL LETTER from a local, reputable lender; if in doubt, ask for a few names from your buyer agent. The preapproval process requires verification of income, assets and debt. Combined with your credit rating (FICO score), a lender will determine your buying power. This one document can make the difference between you getting the house or losing it to someone who has one.

 

Cheers to a prosperous 2017!

 

Judy Boyle, Realtor®

Serving Worcester & Southern Middlesex Counties with honesty and integrity since 2003

www.judyboylecares.com

[email protected]

508-561-7164

 

 

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