I came across this article about how all cash buyers are cornering a market that has historically been driven by first time home buyers. To read the entire article, click here.
In my experience over the last 12 months, I’ve seen this first hand. Last Spring & Summer, first time buyers were being outbid by investors or individuals with the ability to pay cash and also offered far over the listed sales price. It was heart breaking to see time and time again when a buyer would be first in the door for a showing, make a full price offer (in some cases even go over asking price) and still be pushed out by cash deals. “All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from 38.1 percent in November, and up from 18.0 percent in December 2012, according to a new report from RealtyTrac. First-time homebuyers, historically about 40 percent of the market, accounted for just 27 percent of sales nationally in December, the lowest since 2008.”
Also mentioned, is a good point about how the increased appreciation of property drives prices higher and higher, making a home purchase even more difficult. Lastly, first time home buyers are also weighed down with heavy student loan repayment and credit card debt, so the new mortgage rules that have gone into effect this month push off the dream of buying a home for many. If you’re in the market to buy a home this year, my experience is to avoid waiting to buy a home prices for many reasons:
- before prices continue to rise
- before interest rates rise, as predicted a full point increase by end of 2014
- the increased activity of buyers flood the market during the “heavy buying season”
- as lending rules and regulations make it difficult to qualify for a loan.