The market in the East Valley continues to be a buyer’s market, since supply is bigger than demand. With interest rates still low, real estate priced healthy, mortgage payments lower than comparable rent payments, and plenty of inventory to choose from, the expectation would be fore more buyers to hit the market. However, we continue to see fewer buyers than the market would like to see.
Why is this? There are quite a few reasons, and though we generally don’t like to speak in generalities, there are some trends that can explain the lower-than-optimal level of buyer activity.
Millennials seem to like renting. Where past generations find community in the neighborhood they live in, Millennials find community online. Millennials like the flexibility of renting, which allows them the spontaneity to pick up and move across town or across the country. Unlike previous generations, Millennials will often move to a new area BEFORE they find a job, since security isn’t as important as previous generations. Even though it is more expensive to rent than to buy in the East Valley if you plan to stay at least seven years, Millennials often don’t want to be tied down to any more than a one-year lease.
Massive Student Loan Debt. With more and more buyers finding themselves emerging from academia and into the workplace only to be crippled with massive student loan debt, fewer are able to qualify for mortgages.
First Time Homebuyers Are Not Eager. First time homebuyers are making up a smaller and smaller percentage of home purchasers. Where they made up about half of homebuyers in 2009, since mid 2010 the first-time homeowners have made up about 30% of purchases of previously owned homes.
Many Are Still Unable or Unwilling to Purchase Again. While there are many, many former homeowners who lost their homes to foreclosure or short sale that are still waiting out the timeframes and repairing their credit, the foreclosure wave has shown to make many who have been through the foreclosure process as well as those who have only observed it from the sidelines to become more hesitant to own in light of the risk.
The Kids Won’t Leave Home! Part of the problem of having less buyers is the hesitancy of Millennials to leave home. More and more younger people in their 20s and 30s are content in staying home and sharing in the costs with their parents.
Many Would-Be Buyers Don’t Trust the Economy. Fannie Mae released a survey that shows that many are not entering home ownership because they think the economy is heading in the wrong direction. National data shows that concerns about economic conditions are holding back many consumers from buying.
Regardless of the issues, it is a wonderful time to be a buyer! There are many properties to choose from, and competition is lower than in past years. To see what homes are on the market and to meet with a lender to see how you might be able to qualify, visit www.azhomechoice.com.
