Aubrey MacMillan and Jared Johnson say they were lucky to find a three-bedroom house they could afford in Portland’s scorching residential market. But the first-time buyers in their 20s had more than good fortune shine on them.
They were disciplined in saving and steadfast in searching for a place that would support them, their small business and their wish to start a family.
They made three solid offers and lost out, sometimes to competitors paying over the asking price in cash and waiving the need for the seller to make repairs.
They saw these defeats not as setbacks but as more time to save for a bigger down payment and to cover closing costs.
Johnson was temporarily unemployed in 2020, but they still held steady in saving what they could.
They were lucky in some respects. They received three stimulus checks that pumped up their savings. Their federal student loan payments were paused and the interest rate was dropped to zero by the CARES Act in March 2020. They funneled those monthly payments into their savings.
And they qualified for a mortgage rate under 3%, close to the historic low.
“The stars aligned,” said Johnson, 29. “Ultimately, we bought for under asking price and under our budget.”
MacMillan, 28, continued, “which afforded us the opportunity to make the house our own” with improvements.
Like many in their generation, the couple have become part of the expected wave of millennials, born between 1981 and 1996, who want to stop being renters.
Making it difficult to all buyers, especially first-timers without a home to trade, is the rising cost of residential real estate and the number of Portland area homes for sale dropping to the lowest level ever reported by the 30-year-old Regional Multiple Listing Service (RMLS).
The median sale price in Portland metro jumped $12,000, about 2.5%, from $488,000 in March to $500,000 in April, according to the latest RMLS report.
Still, real estate broker Kim Parmon of Living Room Realty told MacMillan and Johnson, as she does all her clients, that they could succeed if they remained “strategic and creative.”
Parmon advised them to search online marketplaces like Zillow only for homes within their budget and that met their criteria and that had been for sale at least a week.
“Kim told us to look for a house that survived the weekend rush and didn’t already have 25 offers” so the sellers would be more inclined to negotiate, said MacMillan.
The couple was comfortable not jumping quickly. The lease on their rental home ran through May, and it was the same price to ride out the contract or break it. This gave them flexibility instead of a hard move-out date.
Another benefit: A friend who was living with them and paying toward rental expenses was willing to move into the couple’s new house in Northeast Portland’s Parkrose neighborhood and contribute toward the mortgage.
“We didn’t have the most ideal circumstances to get a house, but we stretched in a lot of areas and made it work,” MacMillan said, “It was a lot of financial gymnastics.”
Real estate broker Sophia Rosenberg of the Hasson Company Realtors said she uses different levers to help her clients, who aren’t selling an existing home, compete against people with proceeds from a home sale.
First-timers can offer to pay the difference between the sale price and the appraisal value to satisfy the lender. They can forgo repair requests, except for safety issues.
“Letting the other agent know that we aren’t writing on multiple houses at the same time,” is another way to distinguish a buyer, Rosenberg said.
“I’ve also started to offer to donate $1,500 to $2,000 of my commission to a nonprofit of the seller’s choice after a successful closing,” she said. “That definitely helps us stand out.”
A recent Zillow report found that at least half of the real estate agents surveyed who represented a home seller said they were offered an all-cash deal, an escalation clause in which the potential buyer would agree to beat a higher offer, a down payment larger than the standard 20% or a heftier deposit.
The listings agents also said they received submissions ahead of the offer review date.
Buyers’ agents are also trying to appeal to owners by letting them rent back their former house until they find a replacement. More unconventional strategies include throwing a pizza party and sending flowers to the sellers, according to Zillow.
There are more than 72 million millennials in the U.S., which makes adults born between 1981 and 1996 the largest generation. As they get older, their priorities turn from renting urban apartments to a home offering safety and good schooling, said Matthew Gardner, chief economist of Windermere Real Estate.
In 2020, millennials represented 18%, or more than 15.2 million, of all owner-occupied households in the country, even though it’s not easy for that generation to afford a mortgage and student loan debt, while saving for a down payment and paying rent at the same time, said Gardner.
The trend for millennials to buy a home has been magnified during the coronavirus pandemic by their ability to work anywhere online, which “has allowed many to consider moving…