Fierce competition emerges for first-time homebuyers amidst a limited supply. The housing market sees heightened demand, especially for mid-priced homes.
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After a brief respite last year, first-time homebuyers are again plunged into a fierce battle for property ownership. The latest quarterly figures from the NVM Realtors Association indicate that mid-priced homes have become especially hard to find due to heightened demand.
Market Dynamics Shift in Favor of Pricier Homes
Realtors connected to the NVM association reported selling 2.4 percent more homes in this year’s third quarter than last year’s. However, the number of townhomes sold saw a noticeable decrease. A closer inspection of the prices reveals a challenging landscape for those with entry-level budgets. Homes priced above 500,000 euros found more buyers, while those below this price mark were less frequently purchased. The property offers available reflect this same trend: there is a deficit of homes under 500,000 euros, yet an influx of costlier properties.
Significant Drop in Available Homes for Sale
This quarter, we witnessed a 9% reduction in the number of homes available for sale compared to the previous quarter. The decline is even more pronounced compared to the third quarter of 2022, which saw 18% more homes on the market. This scarcity underscores the increasing challenges in the homeownership market, as highlighted by the Realtors Association.
Challenges and Heartbreaks for First-Time Buyers
Lana Gerssen, president of the housing industry trade group and a practicing realtor, provides a firsthand account of the challenges. “When viewing the situation from my professional experience, first-time buyers are undoubtedly facing uphill battles,” she shares. Gerssen describes the highly competitive environment of the townhome community, where a single property can attract bids from as many as 20 potential buyers.
The emotional toll on these hopeful homeowners is undeniable. Gerssen recounts moments when she had to console disheartened bidders, explaining why their offers were rejected. The current trend of overbidding adds another layer of complexity. First-time buyers who overbid can struggle to secure mortgages with the National Mortgage Guarantee, especially if their purchase exceeds 405,000 euros. This impacts their mortgage interest discount and deprives them of residual mortgage debt guarantees.
Underlying Causes and the Path Forward
The crux of the problem lies in the limited supply of homes. Despite facing higher inflation and mortgage rates, first-time buyers often have significant funds due to substantial wage increases. However, suitable homes within their price range still need to be discovered. NVM points to a shortage of new constructions as the primary culprit. Although there is a projected mild increase in new home sales for the third quarter of 2023, the numbers are still historically low. This, unfortunately, ensures that many continue to face challenges in the housing market.