4 real estate gaps all realtors should explain to their clients
These gaps will continue to widen by the day until it affects the economy. However, when realtors understand the gaps, they will find solutions to fill it.
Part of learning the ins and outs of real estate is buyer research.
The buyer brings business to you while carrying unavoidable baggage. This ‘baggage’ could be an unpleasant attitude, finicky demands, or finance issues. As a whole, buyers highlight the gaps hidden in real estate. Zillow, a leader in real estate websites, recently performed research on buyers’ backgrounds to find disturbing inequalities.
Certain age demographics are more active in house hunting than others are. The 18-34 range is an active bunch. Also called millennial, this age group searches for homes due to motherhood and family. The rental market is great for singles testing the waters of living alone, but motherhood millennials don’t have time.
A trend climbing among young adults is moving back to their parents’ house. Previous times where young people could live alone is a dream thanks to rising home prices, an increase in the cost of living, and lower hourly wages. The 18-25 generation is likely to remain at home with parents, although it is decreasing. The 26-34 groups are increasing, but the overall percentage doesn’t stack up to the younger counterpart. Consequently, both groups are renting longer before purchasing their first home.
Expect minorities to pursue homeownership, yet struggle to make it a reality. Minorities are most likely to borrow from mortgage lenders, receive a rejection letter from mortgage lenders, and less likely to become homeowners. Government programs exist for minorities, but is isn’t sufficient.
Money continues to talk in real estate. Low-income people will have difficulty in purchasing a home while higher incomes will not. This is due to rising home prices and steady income. This results in once affordable homes becoming no longer affordable. Low-income workers living in the affordable homes are struggling due to dedicating too many savings, retirement, and paychecks to mortgage payments. In turn, those affordable homes end up on the foreclosed list while low-income workers enter the rental market. Furthermore, rental prices are climbing exponentially to the point where low-income workers cannot afford to make rent payments.
Student debt is a major hindrance for millennials and low-income workers who cannot buy a home. A commitment to mortgage payments is too much debt to handle. Instead, they delay a home purchase until student loans are nonexistent.
Some cities and states will outperform other cities. A state’s metro area is generating more buyers to live there than rural areas. Denver, Raleigh, Charlotte, Nashville, Las Vegas, Atlanta, Seattle, and Boston are hotspots. If a particular state is catching your eye, aim for northern California, southern Arizona, east Texas, Utah, Ohio, and Florida. Likewise, New York City, Los Angeles, Chicago, San Francisco, and Hawaii are too expensive for new residents to buy a home and afford the cost of living. These cities are most likely to lose residents.
The growth becomes a catch-22 for low-income workers. They want to move to metro areas to gain social and economic growth, but can’t do that unless they have the funds.
These gaps will continue to widen by the day until it affects the economy. However, when realtors understand the gaps, they will find solutions to fill it. Begin by making every buyer feel welcome. Treat them with class and respect, yet mention the harsh realities of house hunting and homeownership. Realtors should exhaust their resources to assist these minorities in hopes their dreams come true.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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