Buyer incentives for aging homes

October 31, 2013

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According to RealtyTrac's Aging Home Analysis, more than 70 percent of houses in the U.S. designated as single-family properties were built before 1990. Of all the sales in 2013 so far, 60 percent have been for homes that were at least 20 years old.

While older homes are more likely to be in need of repair, the number of homes for sale in this category represent opportunities for first-time home buyers or those looking to modernize a new space. According to the report, investors who bought 10 or more properties tended to favor purchasing newer homes over older constructions.

"The high percentage of homes that are at least 20 years old and likely in need of some major repairs is eye-opening," said RealtyTrac's Chief Economist Jake Adger. "However, given the low inventory of homes available for sale in today's market, this challenge of aging U.S. housing supply can also be an opportunity for buyers looking for a bargain and homeowners looking to update their living space and improve the value of their homes."

Despite needing repairs and construction work, buyers who purchase an older home may be eligible for FHA mortgages that enable homeowners to rehab and upgrade.

"Many consumers may not realize the FHA 203(k) program allows them to roll in the cost of both minor and major rehab into the purchase financing or a refinancing," said Dennis Walsh, CEO of REBuildUSA. "This means the entire layout of these older homes can be changed to fit more with modern tastes and sensibilities."

Better deals for regular buyers
Older homes can also help regular buyers looking for a low rate mortgage buy a home at a good value. Older homes tend to be priced lower than new properties, according to RealtyTrac. The difference in price between older and newer homes was not too wide, however. Older homes sold for an average of $233,221 while homes built in 1990 or later sold for an average of $256,292.

"The lower price point on older homes is not surprising given many are in need of some rehab and are more likely to have maintenance issues," stated Adger. "But this also presents an opportunity for buyers willing to take on that older inventory. Those buyers can purchase at lower price points and face less competition from institutional investors."

Contact the Federal Savings Bank, a veteran owned bank, to discuss affordable mortgage options.