Entry-level buyers look beyond home price
The lowest-priced home does not always offer the best value, housing market analyst John Burns Research and Consulting said. Entry-level buyers are weighing what the home will cost each month, how well it fits their future plans and how comfortable they feel making the purchase.
For entry-level buyers, the price on the listing may only tell part of the affordability story.
A lower-priced home can actually cost more each month than a pricier property once HOA dues, insurance, taxes and special assessments are added in, according to housing market analyst John Burns Research and Consulting. That makes understanding the full monthly obligation increasingly important when buyers are comparing homes that appear similar on price.
Jack Kelley, senior associate with the firm’s consulting team, said buyers should not assume the lower-priced home is automatically the cheaper option. If one home comes with an extra $100 a month in HOA dues, insurance, taxes or assessments, that added cost can cancel out about $18,000 in purchase-price savings. In other words, a $300,000 home with higher monthly expenses could cost about the same each month as a $318,000 home with lower expenses.
Kelley said three factors consistently shape how entry-level homes compete: total monthly cost, livability and confidence in the builder and buying process.
Once buyers know what they can afford, they also consider whether the home will still work for them several years from now. Flexible space, storage and natural light can matter more than simply adding square footage, particularly for buyers planning for marriage, children or working from home.
The buying experience matters, too. Kelley said first-time buyers want sales consultants and loan officers who can clearly answer questions and guide them through the process, along with confidence that the builder will stand behind the home after closing.
“For first-time buyers, the confidence and comfort a sales consultant and loan officer provide can influence whether they feel ready to move forward,” Kelley wrote.
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