Momentum - Business to Business Online Magazine MOMENTUM SUMMER 2019 | Page 36

REAL ESTATE DEBORAH BLY The Bly Team - RE/MAX Space Center [email protected] www.TheBlyTeam.com The DISAPPEARANCE of the Inexpensive Starter Home Y ou have done all of the right things. Saved up pennies for a down payment and worked on getting credit all squared away. You’re ready and excited to buy your first home. You find the perfect online home, that you click on over and over again, sharing with family and friends. It’s in the right neighborhood, the right size, the right colors and décor. With pre-approval in- hand, you pick up the phone to call your favorite realtor - only to get discouraged when you learn - there are multiple offers. If you are like many 1st time home buyers you can find yourself placing offers on multiple properties only to be repeatedly beaten out by someone else’s better one, or cash! The competition for affordable 3-to-4-bedroom homes is fierce. It seems that no matter how quickly you act, other “buyers” are beating you to it. How is that possible? What many consumers don’t know is that the market for these homes has attracted investors from around the globe. Competing investors include some of the largest hedge funds in the world, many of whom are armed with mountains of cash, ready and able to jump on submitting an offer. These investors target the same price bracket that most home buyers consider affordable. The disappearance of the inexpensive starter home and the frustration that’s causing first-time homebuyers around the country is becoming a trend. Smaller, cheaper, older single-family homes — and homes in foreclosure — are being snapped up and turned into rentals. Roughly one-third of all three-bedroom homes purchased in the past year weren’t bought by people who live in them. They were bought by investors to be turned into rentals. That’s made life harder for families just starting out. Many of the landlords gobbling up small single-family 34 MOMENTUM homes are big corporations looking to squeeze out quarterly profits into the lucrative housing market. Some are simply small-time, hardworking, hustling homebuyers trying to make money and save for retirement the old-fashioned way . . . by owning land. The tightest market is the $200K and below price range. Institutional buyers such as Invitation Homes, American Homes 4- Rent and Cerberus are reshaping affordability in the market. These investors tend to target the same price bracket that are affordable to most home buyers – sub $250K that tend to have a high cap rate (capitalization rate/ return on investment). All of this is putting a lot of pressure on the “first time home buyer”. So what is the fix? • Make sure you are prepared. This means being pre-approved by a qualified lender and having all documentation that you need before you go look at homes! • Make sure that you are set up on an automated notification system. You should know instantly when a potential home hits the market. You can find a customizable home search at TheBlyTeam.com. Immediate notification is your edge! • Be ready! When the right home comes along act quickly! Don’t be surprised if you have to offer full price or perhaps over asking price to get your home. • Have your agent pull “comps”. Homes recently sold that are roughly equivalent to what you are shopping for. Have a strong experienced negotiator that knows the market and inventory in your area of interest. You want to get home - but you don’t want to overpay! In this case experience, and who you work with does matter! Most importantly . . . stay cool. Understanding the numbers and the process will help you make better decisions! Happy House Hunting!