Boomers, first-time buyers battle it out in local real estate market
By JESS BARRON, Lindsey’s Inc. Realtors
Realtors have seen buyers battle it out in multiple offer situations during this current real estate boom.
A low supply of homes for sale only increases the competition between buyers. More specifically, a low supply of “smaller” homes has significantly increased the value of homes that baby boomers (our older population) and first-time buyers would like to purchase. These two groups of the population, while very different, are competing over the same type of home in many situations.
Many younger buyers are looking for a smaller first home that fits their budget. At the same time, our older population is looking to downsize, decrease their budget, and have less to maintain at their residence.
Most new construction is outpriced for these buyers. Of the 71 new construction homes for sale in Coweta County at the time this article is being written (according to GAMLS), the lowest priced is $334,900. 63 of the 71 new construction homes are priced over $400,000. This leaves a significant portion of the two groups of the population to battle it out over residential re-sales.
Contributing to this low supply of smaller homes is the fact that “they just do not build them that small anymore.” The minimum square footage for a new home in Coweta County is 1725 square feet. I see re-sale homes under this size go for well over $150 a square foot and some of the nicer ones push $200 a square foot.
So, who is winning these bidding wars? Typically, it is the cash buyer. With less contingencies and quicker closing times, the cash buyers will win the bidding over financing offers, even if their offer is sometimes less. This means that the baby boomers are often winning the bid and closing on the home since they typically have more cash than the younger buyers. Our baby boomers are often able to take the equity out of their current home, savings, 401k, etc. and pay cash. The younger first-time buyers, usually having a heavy amount of financing, are having to go find another home to bid on. This can be very frustrating.
Being cyclical, the real estate market will eventually turn and favor the buyers at some point. But right now, it is a very competitive time to purchase a home, particularly for someone looking to downsize or purchase their first home. Seems like it is a good time to build a small, affordable home.
Jess Barron is an Associate Broker with Lindseys, Inc. Realtors and former President of the Newnan-Coweta Board of Realtors.