As the average sale price of homes in the Twin Cities area reached $400,095 in February 2023, marking a 0.7% increase compared to 2022, and the inventory of homes for sale is up 7.1% from last February, potential buyers are provided with a broader range of options. However, deciding to buy your first rental property can feel risky in any market climate, especially during a housing correction, which is a period during which housing prices start to fall in some places after a rapid rise.
Understanding Housing Corrections
Housing corrections are caused by interactions between a variety of factors, including mortgage rates, supply, demand, affordability, inventory, and stock market trends. Analysts predict that house prices will continue to fall through 2023, with the markets that grew the fastest in the past year likely to see the starkest decreases. Experts cite a few factors for the housing correction, including fewer people looking to buy expensive homes and young families looking for starter homes.
Staying Informed and Patient
Don’t let decreasing prices discourage you from investing in real estate. Stay informed on market trends and be patient. Housing corrections are temporary and can make home-buying possible for first-time owners or those looking to start their investing journeys without competing with high-capital peers. Higher mortgage rates and limited housing inventory are challenges for potential homebuyers, especially first-time buyers who may lack home equity and purchasing experience.
Strategies for First-Time Buyers
Real estate experts suggest using a variety of strategies to get their first house. Working with a real estate agent can provide guidance and expertise. It’s important to note that first-time home buyers fell to an all-time low of 26 percent of all buyers in 2022, down from 34 percent in 2021, and the median age of first-time buyers jumped from 33 in 2021 to 36 in 2022. Saving for a down payment is a difficult step for many first-time buyers, and student debt can also be an obstacle.
Family Support for First-Time Buyers
Family support is becoming more common for first-time buyers, with many staying at or returning to their family’s house to save. In fact, 22 percent of first-time buyers received a gift or loan from a family member or friend for their down payment. By considering all available options and staying informed about market trends, first-time property investors can successfully navigate the real estate market and make wise investment decisions.
