Buying a home for the first time can be a daunting experience. To the first-time homeowner, it is often unclear whether the proper procedures are being followed or they are being taken advantage of.
Denver is one of the most robust real estate markets in the country, and purchasing a home in this category can understandably confuse first-timers. A strong market means that home options are plentiful, and multiple sellers offer myriad real estate options in various strategic locations. This can be overwhelming for a buyer that lacks the right information before entering into a deal. To better understand the complications, it’s time to conduct an in-depth analysis on why first-timers are truly having trouble with their Denver property purchases.
Diagnosing the Problem
As stated earlier, Colorado is noted as one of the most active property markets in the country due to the rapidly increasing number of homes that are sold and the high number of competing sellers offering various property options. However, several experts point out that the continued pace of activity in the market may cause more harm than good. A possible backlash would be the increased difficulty for newer buyers to purchase property in the area.
A recent Bankrate financial report indicates that Colorado is one of the top ten states where first-time buyers have a difficult time breaking into the market. The report cites a bottleneck on home supplies as a major factor in making it more difficult for first-timers in the state to own a home. Local experts also point to other factors including a population growth and a flood of multiple offers but few closings for many properties.
The Unintended Effect
The pace may be brisk for Denver’s real estate market, but it has created the unintended effect of making first-timers think twice about their first purchase. Too many people are bartering for the best offer for a particular property, making it hard for the seller to close. The tight competition for individual properties has reduced the number of prospective homes that first-timers can afford because those that are still available for negotiation already have many offers that far outweigh what they can offer.
The supply bottleneck in new home construction is a factor as well. With fewer new homes in the inventory, first-timers opt to move into apartments and other rental properties in the interim. However, many would-be homebuyers, including young professionals who are just starting out, find they must divert a great deal of their income to pay their lease, leaving less money to be saved for this purchase. The would-be buyer could wait for a time when a new home will be available for purchase, but as long as the demand is too high and the supply is too low, they’ll be renting for the foreseeable future.
Relief on the Way
First-time buyers will be happy to know that multiple measures have been adapted to ease the tight real estate market situation. New construction projects have been piling up since last year and therefore, reducing the inventory deficit, if only by a small margin. The city council is also supporting a number of initiatives aimed at helping lower-income professionals with their home purchases. The objective is to loosen demand by helping lower-range buyers afford the properties they are aiming for through government subsidy.
Various other initiatives are underway to address the home inventory bottleneck. For example, a development company signed a seller financing agreement with the Denver Housing Authority for their next housing project, reducing sales prices and allowing lower-median buyers to afford these homes. These and many other projects are currently underway to address the demand and pricing issues, and it is hoped that they will make things easier for buyers in the near future.
The uncertainty of first-time homebuyers is understandable, especially when they are buying into a busy market. Nonetheless, they need not worry about making a bad investment. As long as they seek the assistance of veteran real estate experts, their home investments will not go to waste.