CHARLOTTE (FOX 46 CHARLOTTE) — As house prices continue to increase, closing deals are becoming more unaffordable.
“With my first-time buyers, it’s kind of a tough game right now,” Broker Erika Wishnefsky said.
With more than two decades in the real estate industry, she said there is one thing that sets the 20 and 30-year-old who are entering the housing market apart from other generations.
“They are coming in with financial preparation that I have never seen before in any other generation,” Wishnefsky said.
They are also facing one of the most competitive markets in recent U.S. history. Sellers are upping prices and incomes are not matching.
The median household would need 32% of its income to cover mortgage payments, according to the Federal Reserve Bank of Atlanta.
“The market demands what people are willing to spend,” Senior mortgage loan officer Lorri Hoffman said
She said there are two things first time buyers have to consider before purchasing – due diligence fees, which can be in the thousands, as well as a gap in the loan process.
Homes in the Charlotte area are going for 15-20% over asking price, so buyers are paying more than what their home is worth in the eyes of lenders.
“Let’s just say, if you said, ‘I am comfortable spending $315,000 to be the best offer,’ well the appraisal may not come in at $315,000 it might come in at $300,000, so there is a $15,000 gap. Where will those funds come from because most people don’t have an extra $15,000 sitting in their bank account,” Hoffman said.