Although most buyers say that their biggest concern about making a home purchase in 2016 is affordability, in reality, they should be more concerned about their competition in the market. According to real estate brokerage Redfin, which conducts a large number of surveys of buyers, sellers, and other real estate professionals on a regular basis, buyers’ fears about competition are growing – and they should be. Just over one every four buyers told Redfin that in 2016, they are most worried about affording their homes, but Nela Richardson, chief economist at the listing an data site, said that the bigger issue will soon be that there are not enough homes in the first-time-buyer inventory to go around.
According to Redfin, some buyers are starting to realize that they could have a competition problem on their hands. About one in five said that competition was their top worry in today’s market. This is potentially good news for real estate investors who can offer unique financing and other types of advantageous deal structuring to would-be buyers. Furthermore, as more buyers begin to worry about competition, you can actually build a list of ready and eager buyers that are ready to buy your deals as soon as you get them under contract.
Richardson noted that today’s would-be buyers are “enticed by high rents and low mortgage rates to begin a home search,” but soon find that there are a “number of obstacles in today’s competitive market.” She noted that starter homes are actually not only the highest-competition sector in many cities, but they’re also phasing out of the range of affordability as well due to limited supply. A real estate investor with a good connection to off-market starter homes will likely be well-situated for the evolution of the 2016 market.
Watch the inventory in your market, then adjust your strategy so that you have access to the most in-demand options.
Point to Ponder:
Will affordability of starter homes be the downfall of this market cycle?
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Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.