Realtor: Buyers have 15 minutes to make a decision as millennials compete in hot home market
MADISON, Wis. — A new survey by AAA shows more than half of Wisconsin’s millennials have bought or refinanced a home in the past two years, or plan to in the next two years. This is causing an imbalance of supply and demand in Madison’s housing market, forcing buyers to make quick decisions.
A neighborhood near Olbrich Park is a highly sought-after area. Located on the east side of town, houses there are selling for a lower price and the neighborhood has a variety of bike paths, grocery stores, and beer gardens within walking distance.
Crystal Hagadorn, a realtor in the area with the Stark Company, said 75 percent of her buyers are millennials. They are looking for houses around $250,000, and 50 percent of her clients are coming from real estate websites like Zillow and Trulia.
The competition in the #Madison #housingmarket is tough! A realtor told me buyers get 15 minutes to see a home and decide if they want to make an offer. Most buyers are #millennials. Could you make one of the biggest decisions of your life in 15 minutes?! I couldn’t! #news3 pic.twitter.com/Fe731NFjW6
— Amanda Quintana (@AmandaQTV) February 8, 2018
The AAA survey shows the top reasons for millennials deciding to buy their first home are rent fatigue, wanting a better neighborhood, and planning to start a family.
Buyers have to move quickly in the today’s market. Often, houses in Madison are seeing five bids after just one day.
Because of this, Hagedorn said most of her buyers have 15 minutes to decide if they want to make an offer on a house.
“You’re not getting a second showing,” Hagadorn said. “You’re not being able to go back two or three times or show your family and get their approval on it.”
Realtor Paul Haviland said many millennials saw their parents struggle financially years ago so they feared entering the housing market, but now they’re starting families of their own, and don’t want to continue paying rent without building equity.
He said most millennials are looking for the same type of houses.
“We’ve seen an increase in desire to have a pedestrian-style life” Havilands said. “Obviously the downtown area and any area that is close to those type of conveniences is very desirable.”
But seeing multiple offers on one home can discourage the first-time buyers who don’t get it.
Homeowner Amanda Klinkner is putting her home on the market this weekend and hopes it sells fast. She’s struggling to find a new home in the same area since so many fellow millennials are also looking there.
“What we’re finding in our price range is getting bought up right away. Some homes aren’t even making it to the open house that they have scheduled,” said Klinkner.
She says she and her friends are in a better spot to buy homes today than they were a few years ago.
“They’re finding more professional jobs with better pay so that they can actually afford a home,” Klinkner said. “There are a lot of really good loan programs out there for first-time buyers, so I think right now is the idea situation for a lot of millennials.”
Mortgage lender Aiman Abozeid said he has recently seen an increase in new preapprovals for well-educated millennials with excellent jobs. Low interest rates, down payments and monthly payments are attracting first-time buyers.
“We see a lot of nice apartments going up and those are $1,400 to $1,600 a month, so you start looking at that versus owning a home. Those are very comparable payments,” said Abozeid with Inlanta Mortgage.
He said interest rates are low now, but they’re expected to go up soon and millennials want to capitalize on that. Thirty year fixed loans range from 4.3 percent to 4.5 percent interest, depending on the buyer’s credit score.
Abozeid projects millennials will continue buying homes at this rate through 2019.
AAA expects 1 in 7 millennials in Wisconsin will buy or refinance a home in the next 12 months.
“I’m seeing a lot of them with 5 percent down or even more. There are a lot of programs that have zero down or low money down, but their biggest obstacle is obviously inventory,” he said.
There are not enough affordable homes to support the demand.
Haviland said land is expensive and this is stopping more homes from being built in the Madison area.
“Subdivisions are being built as quickly as they can. All of the available lots are being used up and also we have a labor shortage in the trades so we’re not able to produce new construction housing at the rates that we need,” said Haviland.
He said in 2006 about 24 percent of all home sales were new construction. In 2017, it was closer to 12 percent.
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