Key takeaways:
- Three-quarters of millennials say they're waiting to buy a home, leading some to wonder if starter homes are "dying"
- Our local trends show that buyers are eager for lower priced homes, but the inventory is low
- By updating your starter home and using your space wisely, you can appeal to the starter home segment
A recent study shows that 76 percent of millennials (aged 18-35) are waiting to buy a home that will fulfill their future needs. The headlines across the real estate industry read: "Starter homes are dying!" but a closer look shows how economic and housing market conditions may explain why younger buyers are holding off.
If you're the owner of a "starter home," here are insights you can use to determine if and when you should sell, and how to best appeal to first-time buyers.
Are starter homes really dead?
Any time three-quarters of a population agrees on something, it can seem like a mandate. But when young, potential buyers say that they are holding off on homeownership, there are many factors at play.
The inventory question
In our local market, the demand for low-priced homes is extremely high and the inventory is extremely low. So, the "starter home" market in Minnesota and western Wisconsin isn't dead – it's actually so hot that first-time buyers may be priced out and unable to buy right now. Some would-be buyers may stick around despite the competition, but it stands to reason that others will exit and re-enter in a few years. And by then, their needs (and savings accounts) may be quite different and a larger home may make more sense.
Millennials and "delayed" decision-making
Next, it's important to remember that many older millennials graduated during the Great Recession, and have dealt with slow-growing career prospects and the onslaught of student loan debt. For this reason, and a variety of other factors, millennials are delaying everything from life stages like marriage and having children, to large "adult" purchases like cars and homes.
I own a starter home. Will I be able to sell?
In our market, homes priced at $250,000 or below are in extremely high demand; in September 2016, these homes sold for 98.5 percent of their list value.
So despite the scary headlines about "the death of starter homes," you'll likely find that there are plenty of local buyers who are waiting for homes just like yours to go on the market. Here are some more tips for selling your starter home quickly.
Economize your space: Buyers today care about how the space in a home is used, not its square footage. Consider opening up your kitchen and dining area to create a more engaging main living space, or add a bedroom to an unfinished basement. If you have a large bedroom where you've always stored an oversized chair or sofa, consider staging an office nook instead.
Modernize the home: Consider upgrading your appliances, roof or adding new windows so buyers can picture themselves moving in without renovations looming over their heads. Most starter home buyers don't plan to stay there for a decade or more, so it can be advantageous to have a move-in ready property.
Stage to sell: Don't underestimate the power of staging your home to appeal to buyers who are searching online or in person. Follow these basic fall staging tips to get ahead.
Ready to sell your starter home?
The best way to determine a winning seller strategy is to work with a true local expert. Reach out today to get matched with a professional REALTOR® who can help you determine any updates that need to be made before you place your starter home on the market.
You can also find more advice on selling by following #SellerInsights on Facebook, Twitter, YouTube and Instagram.
