Young buyers face challenges moving into first homes

Young buyers face challenges when financing homes

Ashleigh Hamilton wasn’t immediately sold when she first saw the home in Harlem she’d end up buying.


At first glance, the 23-year-old only saw the hard work that would go into renovating the one-story 1,700-square-foot home in rural Harlem, but she soon couldn’t deny the property’s attributes: a wrap-around front porch, nearly three acres of land and the reward that comes with making the house her family’s home.

“I am kind of close-minded when it comes to that, so when I look at a house, I want it to be like what I pictured,” she said. “My husband convinced me to go for this one.”

Hamilton and her husband, Blake, found financing to be the most arduous part of the home-purchasing process. Because her husband holds a temp job, the loan had to be solely in Hamilton’s name, and that meant only qualifying for $75,000.

The Hamiltons rented for a year and a half before they found a house in their price range. Hamilton ended up paying $54,000 for the couple’s first home, bought from foreclosure.

“We looked probably for a solid year before we found the house for us,” Ashleigh Hamilton said. “Not just because we couldn’t find a house that we liked but because of the money situation. We had to find something that was within our budget.”

The Hamiltons, both 23, saw the same struggles that many young adults face today.

The generation of adult millennials, ranging in age from 18 to 33, represents the largest share of recent home buyers at 31 percent, but they still must jump several hurdles as they look to buy their first homes, according to a generational trends study conducted in March by the National Association of Realtors.

As millennials, widely classified as people born after 1980, graduate from college and move into the workforce, they are entering the peak time for first-time home purchases. However, stringent credit restrictions, a limited housing inventory, rising prices and an all-time high student loan debt are colliding to create the perfect storm of a tumultuous home buying climate.

“They have this debt,” said Jessica Lautz, NAR’s director of member and consumer survey research. “They’re having a hard time saving because they are paying a larger portion of their income toward their rent. In some cases, they could be pushed out of the home-buying market because prices are now rising.”

A Pew Research Center analysis further found that the percentage of young adults still living at home last year was 34 percent, down from 35 percent in 2012, when 21.6 million young people stayed within their parents’ homes. The report showed this to be highest share of young adults living at home within the last 40 years, including the Great Recession of 2007.

“We did find that they’re the most optimistic of all the generations and that it’s going to be a good financial investment,” Lautz said. “I do think that while they are having these difficulties, perhaps saving for a down payment and getting into that first home, they are excited about it.”

Though the Hamiltons are temporarily back at home with Ashleigh’s parents as they renovate their three-bedroom, two-bathroom fixer-upper, the couple is happy about the purchase.

“We have a six-month old, so we were ready to settle down and have our own house,” Ashleigh Hamilton said. “But, also, we wanted to be putting money into something that we’re going to own instead of just a rental property.”

Brandi Ledford, an agent with Better Homes & Gardens Real Estate, said the biggest issue she has when working with her younger clients is stressing to them the importance of good credit. In April alone, Ledford said she’s had four potential home buyers who couldn’t get approval for a mortgage loan.

“Some by just a couple of points or some because of credit cards,” said Ledford, whose clientele consists mostly of young first-time buyers. “They couldn’t get the amount they wanted to get the type of house that they’re having to rent.”

The local housing inventory also is becoming increasingly limited, said Meybohm realtor Andy Higgins, and young buyers are seeing difficulties not only in securing financing but also in finding a property at their price point and avoiding bidding wars.

“Our lower-end market, or our first-time buyer market, has never been that bad,” Higgins said. “Lately, it’s been extremely competitive and inventory is getting bought up very quickly.”

When 24-year-old Calvin Captville recently put an offer on a three-bedroom, 2½-bathroom home he just bought in Augusta, he wasn’t the only interested party.

There was another offer on the 1,600-square-foot house in the Arbor Creek subdivision, but Captville won in the end. He paid $140,000 for the property, initially listed at $139,000.

A manufacturing engineer for E-Z-GO, Captville moved last June to Augusta from Louisiana for work. He’s since been renting an apartment off Perimeter Parkway.

“I knew I didn’t want to rent for two or three years,” he said. “I wanted to invest my money in some way.”

Captville did, however, have a slightly altered idea of what his first home would like. With his price range capped at $180,000, Captville wanted a newly-built home in a central location.

The home Captville eventually chose is more modest, though brimming with upgrades, than Captville he pictured and was built in 1989. He called it a “diamond in the rough.”

“When I initially started, I was looking at only new homes,” he said. “I wanted something brand new. I noticed what I wanted was in Evans and Grovetown. Evans was a little bit out of my price range. Grovetown was in my price range, but it was a little further out. Before we found this house, it was very challenging.”

Captville’s high expectations for a first home are not uncommon for his age group, said Edwin Douglass, an agent with Blanchard and Calhoun.

“The younger folks, they still want all the fancy stuff, and they realize that it’s very difficult to come by in a first home,” he said. “I do think they’re more conscious. They don’t have to have it whereas in years past, before the recession, people just had to have all the bells and whistles. Now, they’re trying to be a bit more frugal.”



• Largest share of recent home buyers at 31 percent.

• Largest share of first-time buyers at 76 percent.

• Buyers median age was 29 with income of $73,600.

• Purchased, on average, 1,800-square-foot home costing $180,000.

• 62 percent previously rented an apartment or house; 20 percent lived with parents, relatives or friends.

• Plan to stay in home for 10 years.

• 97 percent financed home purchase.

• Relied on savings for down payment.

• Most likely to look online for information during process.

• More than 50 percent used a mobile device during home search.

• Referred to agent through friend, neighbor or relative.

Source: National Association of Realtors



Wed, 11/22/2017 - 00:24

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