Real estate slowdown an opportunity for military families
Affordability challenges are real, but military families can leverage benefits like VA loans to reduce or eliminate their down payment.
- When the market was hot, many military families got outbid by all-cash offers.
- Military families own homes at a higher percentage than the national average.
For a demographic that has a strong desire to own a home, this real estate market slowdown comes at an interesting time for soon-to-be veterans.
A recent survey by Freddie Mac found that 64% of military families transitioning to civilian life expect their search for housing to be extremely or somewhat challenging.
While the elevated interest rates combined with high home prices has made affordability difficult for everyone, in some ways this is a better landscape than the red-hot market of the past few years.
One benefit of being a veteran is access to VA loans, which offer low or no down payment options. When the market was red-hot, though, veterans "didn't stand much of a chance" in the market because conventional loans and cash offers were the winning bidders, said Donna Deaton, a Realtor for RE/MAX in Liberty Township, Ohio.
"With the increase in rates, the buying power is now leveling out to all types of buyers being able to purchase," Deaton said.
Military families represent an important part of the real estate market because of the high ownership rates. According to the Freddie Mac survey, 72% of service members own a home, while 91% of military members who rent want to own a home in the future. For the general population, home ownership is around 66%.
With military families often moving while in the service and afterwards when transitioning back to civilian life, it's a group that should be active in the housing market even when the market is slow. While affordability will continue to be the biggest issue, Deaton said military families will have a little more leverage.
"We still have a shortage of inventory but it is getting better," Deaton said. "As far as trends, we can ask for sellers' closing costs assistance again. Sellers are allowing inspections and dealing with defect notices. Price reductions are back. Days on market are no longer 2 hours and more like 14-21 days."
Finding the right place - at the right price
One important step is making sure military families find a place that best fits their budget, said Kaleena Schumacher, a U.S. Army veteran who is a top agent for Keller Williams as owner of Schumacher Group in Overlake Park, Kansas.
She noted that as price reductions happen and there are opportunities for lower down payments and closing costs, there is a difference in what they can spend and what they should spend.
"I carry that weight on my shoulders," Schumacher said in a phone interview, referring to the fact it's one of the biggest life decisions to make and helping buyers understand what their budget should be with a civilian job.
Schumacher, who finished her army service in 2006, honed her sales skills as a recruiter for several years before going into insurance, followed by real estate in 2013. By 2017 she was a full-time real estate agent and last year sold 92 homes, generating $33.4 million in sales.
In working with military families, Schumacher said it's important for agents to learn about the options they have as well as having deep knowledge of the local market. Given the amount of times they move while in the military and when adjusting as veterans to civilian life, chances are they aren't familiar with the place they are moving to.
Schumacher's experience as a recruiter also carries over to her current role in real estate. She spends time educating those leaving the military about the opportunities of real estate, even in a slowing market.
"Don't be scared of the market," Schumacher said, noting that it's only a slowdown if you want to slow down.
One other piece of advice she has for those in the military who are interested in a career in real estate is to take advantage of programs where they can get a real estate license while on active duty. Doing so will give a person insight on whether it's the right career for them, and they can hit the ground running after they leave the service.