Aspiring homeowners struggling as down payments, closing costs present obstacles
Home sales in the Twin Cities and statewide are down about 5% year to year, according to the latest reports.
Affordability remains an issue with the housing market.
"As a millennial you try to attain that American dream and every year of just being under the cusp," said first-time homebuyer Devin Bliayang.
Bliayang and his wife, Marissa, are moving into their new home with their 14-month-old daughter, Eva, at the end of the month.
They first started looking at homes in 2018, and spent the last few years putting in the work to qualify for the larger home they needed.
"Just really locking in and paying off those debts that would have countered against me, and saving for a down payment," Bliayang said.
Four in five aspiring homeowners say the expenses from down payments and closing costs are a significant obstacle to owning a home, according to a new Bankrate survey.
"It's been more difficult for buyers to be able to obtain financing due to higher rates and the affordability has changed," Zachary Adams, a real estate broker and owner of Wright Sherburne Realty, said.
In 2021, a typical "all-in" payment — including insurance and taxes — on the median-priced home in the metro was $1,800. Now, it sits at $2,800, up $1,000 in just four years.
It puts aspiring homeowners in a more money, less home situation.
For those who can afford to buy, many are choosing narrower, single-family starter homes which are less than 2,000 square feet.
Centra Homes — who the Bliayang's bought from — is selling over 80% of theirs before they are completed. They're often more popular than existing homes because of builder incentives that require less cash.
Adams says somewhere in the mid-$300,000 to $400,000 is the "sweet spot."
"That allows for a rate buydown, or to offset closing costs," Adams said.
It's exactly what the Bliayang's did, and in two weeks they'll move into their home.
"It feels amazing. I feel very lucky and blessed to just have this opportunity to start the American dream right?" Bliayang said.
The key to buying a home hasn't changed. Having a large enough down payment that will make your monthly mortgage payment manageable is a top priority. First-time home buyers should look into assistance programs to help with down payments or closing costs.
