Home prices rose in 2019 at a rate of 3.3%, a drop of 1.7% from 2018’s 5% increase. Even though the price increase went down, home prices still rose. While that’s a bonus for sellers who bought their homes before prices took off, it’s pushing buyers out of the market because they can’t afford a home. The end result is a temporary imbalance until determined buyers can figure out how to save enough to make a monthly mortgage payment affordable. Sellers may find that their home doesn’t sell as quickly as they expect, but they still have the upper hand when it comes to negotiating a final sales price.
Sellers are finding that they can’t expect someone to buy their home at their stated price. They have to be a little more realistic and flexible when it comes to pricing their home and listen to the guidance of their realtor. A seller also has to be prepared to lower their price if need be and willing to negotiate with a well-qualified buyer. That’s not to say there’s a housing bubble about to burst or that a seller can’t realize a nice profit on their home so much as it’s a sign of the current wave of homebuyers having to deal with heavier debt loads than previous generations.
Millennials make up the bulk of homebuyers because they’re in the prime age range for household formation and the desire to have children. They are also saddled with student loan debt and high rents that make it difficult to save money. But as time passes for the millennials, they pay off their debt and have more money to save for a down payment. In the meantime, a buyer shouldn’t be afraid to make an offer, negotiate, and keep saving to have a larger down payment to buy the home of their dreams.
Source: Dave Ramsey
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