Here’s a look at the latest developments in the real estate market.
- Set realistic expectations with first-time buyers from the start.
- Educate first-time buyers on the current market and find a strategy that works for them.
- Win more deals with out-of-the-box thinking and flexible offers.
According to realtor.com, about one-third of buyers in 2021 are purchasing a home for the first time. Realtor.com’s chief economist Danielle Hale shares some key insights:
“With 50% fewer homes on the market this year than last, the U.S. housing market is competitive for all buyers. First-time buyers are at a bigger disadvantage since they don’t have the funds from a previous home sale to help with their down payment or compete with bidding wars. Our recent survey of potential first-time home buyers confirmed this with 44% indicating they haven’t saved enough for a down payment.”
"In order to take advantage of the current market conditions with rising rates it will be important for a first-time homebuyer to make sure that their offer is as strong as possible. To do this you will want to work with a lender with quick processing/underwriting turnaround times and be ready to take action as quickly as possible,” explains Agent Experience Partner Manager Troy Adams. Agent Experience Partners work closely with real estate agents to help clients throughout the lending process.) "In order to take advantage of the current market conditions with rising rates it will be important for a first-time homebuyer to make sure that their offer is as strong as possible,” Adams adds.
The industry trend
As sellers continue to drive the market in available inventory and pricing, it’s key that agents working with first-time buyers set proper expectations before looking at property.
Competition in this seller’s market remains brisk as we move into a strong spring buying season that’s even more competitive than last year.
In 2020, 2.38 million Americans became first-time homebuyers—a 14 percent spike from the previous year.
Low rates have motivated some Millennials to decide to buy rather than continue renting, driving up the number of first-time homebuyers
What we are seeing at Better
“I have definitely seen a huge increase in my pool of first-time homebuyers. First-time homebuyers are empowered more than ever to purchase, especially with the low-interest rates. Those that don't have a huge amount of down payment funds are still able to purchase with the historically low rates,” observes Better Real Estate Agent Jenilee Bennett of Seattle. “Submitting a clean offer with non-refundable earnest money, waiving all/most contingencies, and escalating between 10-20% above list price is the ticket to the show.”
- At Better Mortgage, the number of first-time buyers applying for mortgages has increased dramatically since last year. Through March 2021, Better Mortgage had 17,784 first-time buyer applicants—a year-over-year increase of 126% compared to 7,870 in Q1 2020.
Number of first-time home buyers at Better Mortgage
Avg Loan Amount in USD for first-time Better Mortgage home buyers
Increasing loan amounts at Better Mortgage
- For Q1 2020 the average loan amount for first-time buyers was $343,600.
- For Q1 2021 that average loan amount increased 12.7% to $387,300.
What agents can do next
- Host informational Zoom sessions to educate and connect with first-time buyers
- Manage expectations with new buyers from the outset; determine their comfort level with offers that waive inspections and contingencies
- Share the dedicated resources available at Better with first-time buyers.
- Schedule a call with an Agent Experience Partner to learn how you can save your next client $2,000*
*Terms & Conditions apply