First-Time House Hunters Face Low Inventory and High Mortgage Rates
Breaking into the housing market poses challenges from all sides.
Entering the housing market is a worthwhile but increasingly difficult endeavor, which may explain why first-time buyers made up only 26% of sales last year — the smallest share on record. Buyers face high competition and high interest rates, especially in popular areas like Charlotte and Raleigh. Fortunately, there are options outside of the constant back-and-forth of frustrating bidding wars.
Home Prices Remain High
While real estate prices have cooled off a bit since the frenzy of 2021, home values in in-demand cities continue to steadily climb. In Raleigh, home values are up .6% since last year, and in Charlotte, they’ve increased by 1.2% over the last year. Even these seemingly-small price increases can equate to thousands of dollars in buyer budgets.
These steep home prices make it especially difficult for first-time buyers to enter the market. Without equity from a previous home to lean on, coming up with a down payment and budgeting for monthly mortgage payments at these prices leaves many income levels backed out of the market altogether.
Mortgage Rates Fail To Offset Home Prices
On top of steady home value appreciation, mortgage rates pose a problem for homebuying budgets. While interest rates have dropped a bit since their spike late last year, they remain higher than they were in 2020 and 2021.
These rates, coupled with high pricing, mean that monthly payments for properties that used to be considered “starter homes” are out of reach for many first-time buyers. Studies reveal that first-time homebuyers are budgeting far below the national average home price, indicating a rude awakening when their search begins.
Inventory Falls Short in Hot Cities
Finally, even for first-time buyers who do have the budget to account for rising values and high interest rates, there simply aren’t enough homes on the Charlotte and Raleigh markets to keep up with demand.
In some cities, the competition for housing cooled off when interest rates rose. However, in states like North Carolina where the population continues to grow, the number of available homes simply isn’t keeping up with the number of people looking to buy. This backs hopeful buyers into bidding wars where tight budgets get even tighter. In the end, many people who hoped to break into the housing market end up settling for a fixer-upper or opting for a rental.
Skip the Bidding Wars — Build Custom
Fortunately, there are other strong options for those hoping to join the homeowning ranks. With inventory tight and steadily appreciating home values, now is the time to build. Custom homes aren’t just for millionaires — there are options at a wide variety of price ranges, many ideal for first-time buyers. Building a custom home allows you to prioritize what you truly want in your house and location, without wasting money on features that aren’t important to your lifestyle.
Opt out of bidding wars and cookie-cutter neighborhoods to create the home of your dreams. From sliding doors to dog baths, we build homes with amenities that make homeownership exciting and beautiful.
Ready to enter the housing market? Get started with Atmos today!
