7 Common Challenges Faced By First-Time Homebuyers In 2022

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When tech professionals Jack and Elise set out to buy a house as first-time homebuyers, little did they know that the entire process would be so overwhelming. As Elise remarked, ‘We recently shifted to Austin, Texas in the hopes of leading a relaxed life, starting a family, and investing in a property for the long-term. However, everything from the paperwork involved for a mortgage to fighting with co homebuyers for the same property sent them into a tizzy.’ Jack continued, ‘Austin was perfect in terms of the new opportunities, better open spaces, and amazing restaurants. But we never thought that property rates would be so high.’

Being a first-time homebuyer is not easy, especially in an aggressive property market as the US has been seen for a very long time. It was way back in 2006 that the last time real estate was on fire. The pandemic was perceived to slow down interest, only to result in something completely opposite. There is no denying the fact that the first-time homebuyer is finding it difficult to get the best deals, arrange finances and get their affairs in order. 

In this resource article, we are going to cover some of the major challenges faced by first-time homebuyers in the United States in 2022. If you or someone you know is in the process of buying a new home, you should share this article with them. It can help them understand the ins and outs of the US housing market and how they can guard themselves against expensive mistakes. 

The Challenge posed by COVID-19 to the US Real Estate Market

At the start of the pandemic in March 2020, everyone was proceeding with caution as far as new real estate was concerned. This led to somewhat of a slowing down in terms of demands, as well as supply. Sellers wanted to hold onto their properties in the hope that things would turn around. 

Buyers were cautious of their funds as they did not know how bad the economic situation and pandemic will turn out. Massive lay-offs, businesses shutting, and little or no help from the government led to the real estate ecosystem seeing a significant slowdown. However, things picked up faster than expected. 

As soon as things started to normalize thanks to widespread vaccinations and a rebounding economy, thousands that had delayed their plans wanted to reap the rich dividends of the Fed’s low-interest rates on home loans and mortgages. The pandemic also saw a slowing down of new construction which ultimately resulted in very low inventory in 2021 and 2022. 

Remote working and the new work from a home model also changed the perceptions of individuals. Individuals and families that were once hellbent on buying property in urban and metropolitan areas were now turning their attention to suburban homes that were bigger. They wanted larger yards, more home office space, and wanted to live away from the crowd. 

The role of real estate companies and professionals also saw a sea change. You can now get it (real estate advice) from leading real estate companies. 

List of 5 Major Challenges Faced by First-Time Homebuyers in the United States in 2022

While COVID-19 was definitely a challenge, there were many others that first-time homebuyers had to contend with. In this section, we are going to list five of the major ones. 

1. Employment History and Guarantees

The requirement for financial assistance when it comes to buying real estate is a wise financial decision. However, in the aftermath of the pandemic when millions lost their jobs, switched over, or turned entrepreneurs a shaky employment history did not go down well with banks and financial institutions. The need for a steady stream of income became a debatable issue in the aftermath of the Coronavirus pandemic. While some were lucky, others were not. 

2. Poor Credit Scores and Ratings to secure Home Loans

The Coronavirus pandemic resulted in a period of unprecedented economic hardships. Jobs were lost and people were maxing out their credit cards to secure medical help at hospitals after they themselves or their near and dear ones came down with the virus. This resulted in sketchy credit scores in the low 300s which were deemed as a red flag by lending institutions. Poor credit scores meant that some had to go for options that came in the form of high-interest rates. 

3. Dwindling or No Inventory of Houses in the Country 

2021 and the first quarter of 2022 saw a weird scenario emerge. There were too many homebuyers and too few homes that were on the market. As soon as homes emerged on the market in cities like Austin, they were being grabbed at rates higher than was imagined. The slowdown in the creation of new homes by construction companies also resulted in very less new properties being available. In come centers, this sparked bidding wars. 

4. Being fully dependent on Online Platforms like Zillow 

Zillow’s meteoric rise was as remarkable as its downfall. Critics have blamed Zillow and its flawed algorithm for fuelling an unnatural demand in the US housing market. In late 2021, Zillow announced that it was no longer buying houses and that layoffs were in order. The algorithm had failed and taken several thousand homebuyers with it. Traditional real estate companies were still the best bet when it came to navigating the US housing market. 

5. Balancing the Tightrope Between Savings and going all out

With prices that were higher than ever, individuals and families that were sitting on the fence had two major options. Wait longer or go all in and see what happens. The Fed’s decision of increasing interest rates played a critical role here. People did not know whether it would rise higher and they should buy now, or wait for it to come back down and then go after houses that would no longer be available. This uncertainty resulted in anxiety and sleepless nights. 

The Final Takeaway

The good part about the entire thing was the fact that the first-time American homebuyer was more cautious and shopped around. According to a report in Business Insider, half of the homebuyers attended between two and four open houses. 

While the US housing market continues to be hotter than it ever was, with a little bit of caution, guidance, and real estate agent, first-time homebuyers can successfully navigate the challenges.

With higher cash offers, bigger down payments, and fewer homes, the real estate market in the United States is all set for cutthroat competition. 


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