Real estate has garnered considerable attention since 2020, and for good reason. Though real estate professionals may point to a number of variables that have affected the housing market in recent years, the pandemic certainly was among those factors. Real estate prices and mortgage interest rates increased significantly during the pandemic and have remained well above pre-pandemic levels.

The spike in home prices and interest rates has resulted in a significant impact on young home buyers, some of whom feel as if their dream of home ownership may never be realized. Data from the National Association of Realtors indicates the median age of home buyers is now significantly higher than it was two decades ago. In 2023, the median age of buyers was 49, marking an increase of 10 years compared to the average buyer in 2003

First-time home buyers may face a more challenging real estate market now than even just a half decade ago. The following three tips can help such buyers successfully navigate the market as they look to purchase their first home.

1. Expect to move quickly

Inventory remains very low, which means buyers are in heated competition for the few homes that are on the market. In late 2023, NAR data indicated the rate of home sales were the lowest they had been in 13 years. Buyers will need to move quickly to make an offer if they see a home they like, as chances are the property won’t be on the market too long before it’s sold. In fact, the NAR noted that homes spent an average of just 23 days on the market in October 2023.

2. Apply for mortgage preapproval

The competitive nature of the market for buyers means it’s in their best interests to arrange financing prior to beginning their home search. A mortgage preapproval can be a competitive advantage, indicating to sellers that buyers won’t lack financing after making an offer. The financial experts at NerdWallet note that buyers will be asked to provide details about their employment, income, debt, and financial accounts when applying for mortgage preapproval. Gather this information and clear up any issues, such as credit disputes or delinquent accounts, prior to applying for preapproval.

3. Set a realistic budget and expect to offer over asking price

Financial planners or real estate professionals can help first-time buyers determine how much they should be spending on a home. In the current market, buyers should know that they will likely need to pay more than asking price for a home. For example, the NAR reports that 28 percent of homes sold for above list price in October 2023. With that in mind, first-time buyers should look for homes that are under budget and anticipate offering more than list price.

The real estate market remains competitive for buyers. First-time buyers can utilize three strategies to increase their chances of realizing their dream of home ownership.