More millennials fighting for affordable first homes
Engaged couple Taylor King and Justin Slack of Fargo knew before they got married they’d want their own home.
“I’m obsessed with making something my own,” says Slack. “I’m a DIY’er and I like taking care of a yard.”
“I think for awhile I was on (the real estate site) Zillow 24/7,” King says with a laugh.
But King and Slack didn’t realize it would be so complicated to find their first home. Slack, a 27-year-old union plumber and pipefitter, and King, a 23-year-old graduate student, wanted a home under $200,000. But the pickings were slim. So when a 1926 home in an established south Fargo neighborhood became available for $170,000, they took note.
“It had three bedrooms, two bathrooms and a fenced-in yard for the dog,” King says, “I told him we have to look at this today.”
So they called their Realtor and immediately made time to see the house.
“We made an offer before we left the home,” Stack says.
And it’s a good thing they did. Before the day was up six more people placed offers on the house they wanted.
It probably doesn’t make King and Slack feel any better, but they’re definitely not alone. Many millennials are fighting to find their first home in an affordable price range. Because many millennials are just starting to earn money while still paying school loans, expensive homes are out of reach. The homes within their reach — those under $200,000 — are often the toughest ones to find. According to the Fargo-Moorhead Association of Realtors, homes under $200,000 sell faster than any others. Most will sell in a month or less – way less – sometimes within hours. The fastest selling properties fall in the $100,000-$149,000 zone.
“That market is tough,” says Ron Rheault of J and L Construction, whose clientele is largely first-time homebuyers and empty nesters looking to downsize.
“Anytime you’re looking at older, established neighborhoods there’s a definite shortage in that range,” he says, “If you find a home for $160,000 you’ll be competing with a lot of other people – including those downsizing empty nesters – so you better have all your ducks in a row and be ready to go.”
This is the case for King and Slack, they acted fast and placed an offer even though all of their questions hadn’t been answered.
“It would have been nice to have a little more time to look around, have another inspection and give it some time,” Slack says, “It’s too bad it has to be like this – but that’s the way it is now.”
Even after making the offer, the seller still held all the power. At first, King and Stack wanted the seller to pay half the closing costs.
“We thought that was pretty standard,” Slack says, “But our Realtor told us. ‘If you want to be competitive, you need to pay the closing costs, too.’”
They knew if they didn’t, five more offers were waiting in the wings.
Rheault says on the other hand, if millennials are willing to step away from the older neighborhoods and look at building their own home, real estate agents and builders will work hard to make it happen in an affordable way. He says brand new bi-levels and twin homes are great options for first-time homebuyers.
“We can get them into these twin homes for $200,000 with specials paid,” he says, “and if they’re looking to move on, resale on these is phenomenal. There was a time they didn’t last three hours.”
And Rheault says if buyers are willing to look even just a few miles out of Fargo-Moorhead — Mapleton, for example — twin homes can run around $165,000.
Rheault says it’s important for first-time homebuyers to do their homework to learn about programs which could provide financial assistance that doesn’t need to be paid back – incentives to get more people in their own home. The North Dakota Bond First Time Home Buyer with Start Funds pays three percent of the home’s purchase price if the homeowner lives in the home for eight years. In Minnesota, assistance can be found at the Minnesota Housing Finance Agency.
King and Slack also agree that first time homebuyers need to be prepared. Slack suggests taking a first-time homebuyers class and being aware that some unscrupulous people might try to take advantage. Now, as they sit in their new, older home in south Fargo, the couple can look back at their experience and reflect upon what they’ve learned.
“It was really stressful,” Slack says, “but it’s been worth every penny.”