Are First-Time Houston Home Buyers Avoiding the Market?
A recent article in MarketWatch suggested that young adults are avoiding home buying. A number of the reasons involved are based on personal attitudes, misconceptions or a lack of information! Here in the Energy Corridor of Houston, first-time buyers can succeed if they are financially prepared and understand local market conditions. To help clear things up, we’ll talk about points in the MartketWatch article and include our insights!
Home Buying Attitudes of Young Adults:
Millennial adults are not prioritizing home ownership in the way prior generations have, primarily because they are delaying traditional benchmarks of adulthood. This includes buying a car, leaving home, getting married, and starting a family. Some of this is based upon economic realities; today’s college graduates carry a high debt burden, and the Great Recession meant job losses and a delayed launch of careers. This generation also witnessed a historic wave of foreclosures, which colored their view of home ownership.
This does not mean that all Millennials are resistant to home ownership! While the number of first-time home buyers has dropped in recent years, paradigm shifts in the real estate industry have been part of the challenge.
Past Economic Challenges to Home Buying:
The Great Recession brought along sweeping changes to mortgage lending. We went from an era of “stated income” and “zero-percent down” mortgages to an over-correction in home financing practices. High credit scores, large down payments, and stringent underwriting practices made obtaining a mortgage more difficult for all concerned. For first-time buyers, the paperwork process was especially cumbersome and intimidating.
At the same time, bank appraisals became more conservative. When appraisal values failed to agree with home sale prices, it meant a delayed closing or a failed deal.
Fortunately, mortgage lending has gradually returned to balanced underwriting. Today, mortgage loans may be obtained with as little as 3% down, and credit score requirements are not as lofty they once were. The reduction in distressed properties also helped bring appraisals back in line with sales prices. While recent changes in settlement disclosure requirements have slowed some closings, the overall transaction process is smooth.
Houston Offers Home Buying Opportunities!
According to WalletHub, Houston ranked among the top cities for home buyers in 2015, placing at #54 out of 300 metros. Rising home prices have been the largest challenge facing first-time buyers in the Houston Energy Corridor, but we expect to see improvement in home inventory during 2016, which should taper price pressure. Meanwhile, mortgage interest rates remain near historic lows.
Houston rent prices are also likely to motivate home buyers this year. According to Rent Jungle, the average rent for a 2-bedroom apartment within 10 miles of Houston is $1,798. When you factor in the long-term economic advantages of home ownership, home buying becomes an obvious choice!
Of course, not everyone’s lifestyle is suited for home ownership. Those who must relocate frequently, or do not wish to have the responsibility of maintenance and care of their property, may prefer to rent. If you are a first-time home buyer, you should carefully consider your long-term goals, family needs, economic abilities and personal preferences.
Ready to buy a Houston home? Obtaining the expert advice of the KW Energy Corridor Team is the first step in a successful home purchase! We will be happy to provide you professional guidance throughout the process.
Wishing you all the best in 2016,
KW Energy Corridor Team
11757 Katy Fairway | Suite 930
Houston, TX 77079