New Subset of Buyers Enter the Market
Many of the battle-hardened buyers from the spring have found their homes. We’ve now got this new buyer who is not quite as eager or worried due to the nice flow of listings. As things slowly start to return to normalcy, we’re seeing the market begin to soften and buyers are not feeling the same pressure to buy the first home they see.
Should Your Recent College Grad Buy Their First Home?
Many parents question whether this is a good time to encourage their kids/recent college graduates to invest in real estate?
The market is hot and prices are high but interest rates are also at historic lows. Dr. Ted Jones, the chief economist at Stewart Title, pointed out that while everybody realizes that housing costs are high right now, people overlook that affordability is about as good as its ever been. Home prices are at record highs in some areas, but because interest rates are so staggeringly low, the cost of owning a home has never been more affordable. In Columbus for example, the median home price is about $250k and the median income is between $30k and $50k. At current interest rates, the monthly payment on a median-priced home is the lowest percent of a median earners monthly pay as weâ€™ve ever seen. Additionally, with the rising cost of building materials and labor, housing won’t become any less expensive while rents go up.
There are costs associated with owning a home, and while you’re renting, that’s not a concern. You are still paying that cost; however, it’s in your rent payment. You’re not building any equity as a renter. An important thing to consider if someone is thinking about buying their first home is how long they plan to live there. If there is potential, they may not be there for at least 3 years; they’re better off renting. As a general standard in Central Ohio, you can expect real estate to appreciate 3-5% a year. Despite the affordable housing crisis, this is still an excellent time to buy a first home, given that you know you’re going to stay for at least 3 years to establish equity and realize a gain when you sell.
What is required from somebody to make a competitive offer on an existing home in this market is substantial. We’ve had dozens of clients whose parents assisted their children by giving them the cash to buy the house. Offering cash allows their child to get the best buy possible in this market. Then on closing day, their child gets a mortgage, and the parents get their cash back.
There are other ways to help your child buy their first home. You can be a non-occupant co-borrower, which won’t cost you anything, but it will increase your child’s buying powers. Additionally, you can offer to float them the cash to provide appraisal gap coverage.
If you’re looking to help your child find their first home and navigate this market, Thomas | Riddle has agents ready to help you. Being an established top team in Central Ohio, our ultimate goal is to aid our clients every step of the transaction. Regardless of the price point, sound advice and experience are more critical than ever in this market.
Riddle Family Update
This month, Stanley turned 3 and had an awesome dinosaur-themed birthday party. We feel fortunate that we could celebrate with family again because we weren’t able to last year. At the tender age of 5 months, Charlie adores his big brother and looks up to him. Johnna and I are looking forward to being outside more with the kids as the weather warms up.