Columbus real estate poses opportunities, challenges to millennial home buyers
According to a new survey by BMO Harris, the majority of young adults intend to become homeowners sometime within the next five years. The survey sampled adults aged 18 to 34, and debunks the theory that millennials are less interested in home ownership than the generations before them.
Based on the nationwide survey, 74% of millennials said they planned to buy a home within the next five years. 45% of these young adults said they planned to buy a home within the next two years.
When asked about their motive for home ownership, survey respondents indicated the following common factors:
- The desire to own rather than rent
- The desire to have their own yard
- The freedom to perform renovations and cosmetic changes
- The confidence in home ownership as a long-term investment
Despite the common interest in home ownership, some millennials find it difficult to buy a home. BMO Harris economists attribute burdensome levels of student loan debt as part of the challenge facing millennials, along with rising home prices.
Here in the Columbus area, home prices increased by 9.7% from April 2013 to April 2014. While prices are expected to cool off as inventory improves, affordability and supply will remain a concern, especially for first-time Columbus homebuyers.
One of the challenges facing the metro Columbus home market is the pent-up demand from many homeowners who would like to sell, but are unable to do so, because they are “upside down.”
Columbus housing market trends are highly localized
“Upside down” refers to situations where the home value is not sufficient to satisfy the outstanding mortgage, and also pay the transaction costs associated with selling the home. Transaction costs for home sellers include title insurance, commissions and other closing costs. After these expenses, sellers who lack sufficient home equity have little money left to put down on their next home, or worse – no money!
In this situation, potential sellers would need to pay money out of their own pockets at closing in order to complete the deal. Most are financially unable, or unwilling, to do so. Especially hard-hit are those who bought homes during 2002 through 2009, with little or no money down in the overheated housing market. Equally hard-hit were those who bought newly-constructed homes with little or no money down from 2001 thru 2010.
As a result, there are fewer Columbus homes available for sale. We also have about 50% fewer distressed properties on the market compared to a year ago, such as short sales and foreclosed homes. Combine both ingredients, and you have a recipe for “micro” seller’s markets!
Homes in these localized seller’s markets are currently going for full list price or very near it. Some homes are receiving offers well above the list price, along with multiple offers from several buyers.
Yet there are still homes that do not sell quickly, or sell for considerably less than list price. In this case, homes often linger on the market because they do not “show” well; or, they are overpriced for their condition, or overpriced compared to competing homes in the same price range. Columbus home buyers face a variety of market dynamics depending on the area and price range involved.
Eventually, we will see market equilibrium when home values return to the pre-crash 2006 – 2008 price points. This will be good news for home sellers, but may pose affordability challenges to home buyers. In all cases, Columbus home buyers can position themselves for the best opportunities on the market by having dedicated, professional representation on their side!
As your Exclusive Buyer’s Broker, we serve your best interests at all times. Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.
Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!
Contact us with your Columbus home buying questions! Remember, we are with you every step of the way…all the way home!
Andrew Show
Broker, CEBA, CEBA-M, CNE, CSP, ABR-M, e-PRO, GREEN
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax
