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It’s a tall order — but you may be able to buy a home sooner than expected.
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Buying a home can be a challenge at any time. But over the past couple of years, it’s been even harder due to the state of the housing market.
Since mid-2020, home values have been up on a national level. And this year, mortgage rates rose substantially. So all told, in 2022, buyers have faced an affordability crunch in particular.
It’s not surprising then, to learn that first-time buyers made up only 26% of all buyers this year, according to data from the National Association of Realtors. Now to be fair, first-time buyers don’t always comprise such a large share of the market. But a year ago, they made up 34% of buyers, so there’s been a big dip.
It’s easy to explain why first-timers tend to have more difficulty buying a home, though. First-time buyers, by nature, don’t have equity they’ve built up in another property. So they need to save up a lot of money to put down on a home — especially in a market like the one we’re in today.
If you’re hoping to become a first-time home buyer, there are steps you can take to achieve that goal. Here are a few key ones to start with.
1. Find the right real estate agent
A real estate agent who knows the local area and has experience working with first-time buyers could be your secret weapon in a market like this. That’s because the right agent will be able to negotiate with sellers on your behalf and help you navigate a bidding war should you wind up in one. The right agent will also be able to tell you when it’s worth it to pay up for a home, and when you’re better off bowing out in a situation where there are multiple buyers.
2. Get pre-approved for a mortgage before you start shopping for homes
You may not have a clear sense of how much house you can afford in today’s market. A mortgage pre-approval letter will tell you that. And that could help you better focus on looking at homes that fall within your price range.
Plus, when you make an offer on a home and you’re already pre-approved for a mortgage loan, it shows sellers you’re a serious buyer. That could help you get an offer accepted.
3. Consider a fixer-upper — but with caution
As a first-time buyer, your options may be limited, financially speaking. And so if you’re willing to buy a home that needs work, it could be your ticket to homeownership.
But before you buy any home, make sure it goes through an inspection so you get a sense of what fixes you’ll need to make and how much they might cost. Otherwise, you could wind up way in over your head — and in a worse position than you’d be in had you simply paid a higher price for a home in better shape.
Breaking into the housing market is not an easy thing to do today. But if you take these steps, you may have an easier time being successful.
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