THE CHANGING LANDSCAPE OF HOME BUYING AND SELLING

An interesting article on Curbed.com outlines the history of the US housing markets following World War II and details how much more expensive it is for the typical homeowner to buy a house today. While many Millennials express a desire to own a home, it is clearly not the same landscape their parents and grandparents faced when they were first entering the housing market. This creates challenges for today’s buyers.

Nevertheless, for Millennials who are on the precipice of home ownership in 2019, the general consensus seems to be that there’s no time like the present. Why? Because interest rates are expected to climb this year, which means that nothing will be as affordable as it is at the moment. Prices have dipped some since the beginning of 2018, too. Individual markets vary of course, but if you are considering homeownership, this is a good time to dive in.

Like many aspects of today’s society, real estate trends have begun to shift in light of the sheer number of Millennials entering the market. Though many industry analysts have pointed to Millennials as a generation of renters, the numbers support the idea that this demographic does, in fact, want to own a home. And when Millennials go house-hunting, they are generally looking for smaller starter homes in need of very little—if any—renovations.

The largest portion of Millennials will turn 29 in 2019. Since homeownership and other life milestones like marriage and children usually coincide, all signs point to 2019 being a big year for Millennial home buyers. And next year, as this group turns 30, the trend will likely continue. The rate at which Millennials become homeowners may heavily depend on the interest rates.

The home-buying process has changed very little over the years. Generally-speaking, sellers find a real estate agent who evaluates the current value based on its condition and what comparable homes are selling for. The agent adds the home to the MLS (Multiple Listings Service) so buyers and agents can find it. Buyers have their own agent, though these days most people use online resources like Zillow and Realtor.com to do their browsing.

When it’s time to make an offer, the two parties’ Realtors handle the legwork and ensure everything is in order for a smooth sale. It sounds simple, but anyone who has been through the process can tell you there’s a lot more to it than that. On the selling end, you have to factor in what it takes to get your home ready to be sold—from simple decluttering to major repairs in some cases. Then there are Open Houses, showings, last-minute schedule changes and so on. Sellers are also on the hook for the Realtors’ commissions, which need to be factored into the bottom line. Buyers also go through a long process, from getting pre-qualified to putting in offers and going through the home inspection process before finally getting those keys. And don’t forget about all that paperwork, on both sides of the equation. Realtors play an important role throughout the process. There are many moving parts and emotions can run high. Details can be missed without an untrained eye making sure everything is in place.

All of the companies using this business model are looking to expand, but currently, most are only available in larger metropolitan areas. They all have their own criteria regarding the type and value of homes they are interested in purchasing.

Unlike “house flippers” who buy distressed houses in need of a lot of work, these companies are generally looking for homes in good condition. They may be willing to make some upgrades and minor improvements, depending on the local housing market. Offerpad has a graphic that breaks down the financials of going with their system as opposed to a traditional real estate sales channel. However, it is important to read all fine print and keep in mind that every case will be different.