This may come as a surprise to many, especially to all of those baby boomers who are used to thinking of themselves as a powerful, vocal demographic, but the reality is that it’s over for the boomers. They’re getting old, they’re dying and they’re now living on fixed incomes. As a group, their spending power is significantly diminished. Say hello to the millennials, those born between 1981 and 1997.
According to the 2015 NAR Home Buyer and Seller Generational Trends study, this group has surpassed the baby boomers as the largest group of homebuyers. This is stunning. They’ve overcome huge hurdles, including student debt, entering the job market during the recession, dealing with post-recession low salaries and a more unstable lifestyle. Yet an increasing number of these young people is entering the housing market. Millennials are expected to form 20M new households by 2025. Studies show that more than 49% of young renters believe their next move would likely be to own a home.
Buying a home is a rite of passage, a distinctly adult financial journey. Knowing what to expect can help make the process easier.
- Make a plan. Thoroughly research and explore the areas in which you’d want to live. Consider practical things as well as quality of life issues--your neighbors, your commute, parks, trails, the ability to walk to shopping and services, if that’s important to you. If you have kids or are planning to start a family, good schools become a priority.
- Research first, then consult an expert. Get in touch with a professional who stays current on the market, the process involved, and has the resources to guide you.
- Choose a real estate agent carefully. Interview at least two real estate agents. Find out how well they know the area in which you are buying, how long have they been in the industry. Do they know about contracts and how are there negotiating skills? Look for reviews and talk to those who have worked with an agent.
- Create a team of rock stars. Getting prequalified with a local, highly recommended lender before starting the process is critical. Work as a team with your lender and real estate agent. Your agent should also be able to refer excellent inspectors, contractors, etc.
- Invest in the future. This may be your starter home, which means you might not be there forever. Think about how easy it will be to sell that home you’re purchasing. At the same time you should be thinking about repairs. Be careful about making repairs or major changes that will adversely affect a home’s potential value.
- Get educated. Ask lots of questions of your team. Purchasing a home can be overwhelming.
- Buy smart. Be thoughtful and realistic. Begin with a starter home, which may be a cottage or a condo. As your career and family grow and you’re making more money and need a larger home, that’s the time to start looking for that four-bedroom/three bathroom home. If you’ve purchased a starter home that has appreciated in value, this becomes the foundation for your next home purchase.
Working with a great real estate agent is key to finding the home that is right for you
Parisa Samimi is an East Bay realtor with more than 20 years of industry experience. She’s committed to making each transaction seamless for her clients—including first-time buyers. Contact Parisa today at (510) 410-4050.