Mortgage rates continue to climb, and inventory remains limited, causing potential sellers to stay put with their current low rates and pricing potential first-time home buyers out of the market altogether. The average age of a first-time home buyer is at an all-time high of 36 years old, up three years from last year, according to the National Association of Realtors® 2022 Profile of Home Buyers and Sellers. It is no surprise considering today’s first-time home buyers are facing overwhelming student loan debt, inflation, and rising living costs, making it harder to save for a down payment and closing costs. On top of that, we’re experiencing a nationwide housing shortage as sellers are reluctant to list as they are already locked into low rates. “If we stopped listing homes today, we would only have enough supply to last one month, compared to a normal market, which has about six months' worth of inventory,” shares Ron Minges of the Gary Mercer Team at Keller Williams Realty, serving West Chester County, Pennsylvania. Minges also predicts it will be 16-18 months before the market returns to normal inventory levels.
Even as the market slowly cools off and we see more buyers forgoing all cash offers and keeping contingencies, the high mortgage rates are creating a challenge for first-time home buyers to afford real estate in desirable neighborhoods. The higher the interest rate, the more income a potential buyer must make to qualify for the same house. This is forcing many first-time home buyers to drastically adjust their expectations of what that first home will look like and what zip code it will be in. “Buyers are shifting their price range. The climbing rates have changed the search parameters for many – expanding locations or reducing some of the must-have features,” says Jennifer Bender, a Realtor with Keller Williams serving the Greater Philadelphia Area.
Renting an apartment provides many benefits to prospective first-time homebuyers right now: flexibility, maintenance-free living, predictable monthly expenses, and the ability to live in their desired zip code. Many luxury apartments are situated in prime locations and offer security, on-site maintenance, apartments with high-end, home-like finishes, and on-demand business and resort amenities. Agents like Stephanie Walton, of Addison Wolfe Real Estate in Bucks County, Pennsylvania, posit “buyers may opt to rent for a year or two to improve their cash position and allow the market to respond to the higher rates.”
Today’s batch of first-time home buyers, which represent 43% of all buyers, understand that buying the right home can be a wise decision to build equity, but are savvy enough to see renting as an unseen benefit during a difficult and unfavorable market. Luxury apartment living is a smart housing solution during a period that requires patience from eager first-time home buyers.
Take renters Eduardo and Cailtin, a newly engaged couple that met abroad. They relocated to the United States and now rent a luxury apartment in North Austin. While living in a fully furnished apartment at AVE Austin North Lamar, they researched house listings with a local real estate agent; however, Eduardo and Caitlin quickly realized that current home prices and the locations were not what they had in mind. They decided to rent at AVE longer term and move into their 1-bedroom luxury apartment next month.
Similarly, Ashley, a sales professional in New Jersey, and her boyfriend Curtis decided to rent a luxury apartment in Florham Park, NJ at AVE Florham Park versus purchasing a home, so they didn’t have to sacrifice desired amenities due to the current market in Northern New Jersey. “Due to the incredible lack of inventory, fierce bidding wars and skyrocketing prices, we decided this may not be the best route to take at this moment in time,” recalls Ashley. Upon first stepping foot in AVE, the pair knew they had found the perfect place. “With Curtis opening his own barbershop, SILK, a couple of miles down the street, AVE Florham Park could not be in a more perfect location. The strong feeling of community, incredible cleanliness and sense of security sold me immediately. We signed our first lease just a few days after our tour and just signed our renewal through 2023,” shares Ashley.
If you’re interested in renting a luxury apartment, check out AVE’s first-class rental communities. We have 15 convenient locations nationwide.