Now that millennials have finally entered the home buying marketplace, the entire housing sector has changed. Many of these younger buyers are doing quite well in their early careers. They work with experienced real estate agencies and acquire wonderful homes — great. But many of these millennial buyers, most of whom came of age during the housing crisis, aren’t sure how to maneuver through the complicated housing market.
According to Real Estate, many first-time home buyers are not doing their due diligence when it comes to buying homes, and their ignorance is leading to some complicated and serious financial issues.
Though only 10% of all first-time buyers (and repeat buyers) will purchase homes priced at $500,000 or more, it doesn’t matter how much the home costs. Buyer strategies, financing, debt to income ratios, and other logistical aspects can’t be overlooked when it comes to buying a property.
“Many first-home buyers are entering into sales contracts without pre-approval and are missing out on their dream home when their finance doesn’t come through in a timely fashion,” said Peter Maloney, chief executive of GlobalX. “This can easily be fixed by contacting a mortgage broker, or bank, well in advance of looking at properties. This way buyers will know exactly how much they can spend.”
In addition, millennial buyers can run into trouble when they fail to perform market research. Property Mavens founder Miriam Sandkuhler urges millennials to take a look at every aspect of buying a property, not just the initial costs.
“It’s important they do research around property prices in the street they’re looking in and compile their own comparable sales,” Sandkuhler said. “But that can still be complex, so that’s possibly where a buyer’s advocate can help.”
Additionally, there aren’t too many millennial buyers who are fully aware of how much work they will have to put into their homes down the line. Though 35% of all remodeling jobs in the U.S. involve the entire home, many first-time buyers don’t realize just how much home improvement they will have to perform over the years. Instead of purchasing fixer uppers, they would rather acquire furnished homes that have a strong tech presence.
Despite these potential obstacles, millennials and their love of technology will likely revolutionize both home ownership and home buying. In fact, according to a Harris Poll survey that questioned 3,000 U.S. homeowners, 77% of all respondents said that they would prefer to take a tour of a home using virtual reality technology before actually visiting a prospective home. Similarly, 84% of respondents agree that they would like to be able to see video footage of a property or home before physically visiting.
Though 80% of all millennials do have the desire to purchase their own homes one day, the Great Recession and student loan debt has delayed many young people’s entry into the housing market. Now that they’ve finally arrived, they’re encountering some entirely predictable roadblocks along the way.