5 Reasons First-Time Home Buyers Aren't Knocking on the Doors of Fixer-Uppers

Fixer-uppers were long considered a rite of passage for first-time homeowners -- a more affordable entryway to homeownership.

But today, the average first-time home buyer is actively avoiding homes that need extensive work or renovation before being fit for human habitation. The Rocket Mortgage® survey of first-time home buyers explains why fixer-uppers aren’t obvious go-to options. It shows, for instance, that many people are willing to pay beyond their budget for something move-in ready.

Economic, lifestyle, and market trends are changing, and these changes have shifted the priorities of many consumers on the hunt for homes. Rather than actively looking for properties to fix up and move into, home buyers are instead opting for move-in-ready properties.

Here are five key reasons why fixer-uppers are no longer as attractive to first-time home buyers.

1. Budgets Are Tight

First-time buyers often stretch their finances to afford homes. The rising cost of real estate, rates of interest, and other expenses leave little room in case of unexpected costs. Although fixer-uppers might be cheap up front, renovation work could easily push the true expense of ownership well above what it might have cost to buy a move-in-ready house.

Budgets for renovation work seldom remain on target. And unforeseen issues can emerge and turn the dream of buying a fixer-upper into a costly, head-pounding, and eye-watering nightmare.

If you’re a first-time home buyer, it might be more appealing to get something you can move into and enjoy right away without first having to undergo time- and cost-intensive work.

2. Home Renovation Loans and Financing Are Complicated

Financing for a fixer-upper property may be more complicated than for other property types. Some homes that are in need of repairs may not be qualified for financing. If you find yourself facing this scenario, you may have to find other ways to fund fixing up a fixer-upper.

Condominiums that are move-in ready make home financing much simpler. Buyers can apply for a mortgage without worrying about approvals for renovations. This can be a huge benefit for first-time home buyers who are still learning the fundamentals of home buying.

3. Time Constraints Don’t Align With Renovation Demands

Many first-time home buyers are juggling demanding careers, young families, and long commutes. Fixer-uppers are time, labor, and decision-intensive. They might simply be too much extra work for already busy people to take on.

If you want to buy a home and need to occupy it immediately, waiting for the renovations to be finished is not an option. The added costs of temporary housing will only add to the stress. Move-in-ready homes mean that you can move in quickly and focus on building your lives.

4. First-Time Buyers Desire Stability, Not Stress

Purchasing a first home is a significant milestone in life, and many people want that experience to be exciting and positive -- not stressful and overwhelming. Fixer-uppers tend to make the initial stages of owning a home a series of challenges rather than a smooth transition.

Having to live in a house that requires constant repair work can be a mentally draining experience. Noise, dust, restricted access to specific rooms, and constant disturbances can wear on anyone’s nerves. It’s easier to pay more up front for something that’s liveable.

5. Renovation Returns Are Less Predictable Than They Used to Be

If you’re in the market for a home, it might be tempting to buy a fixer-upper and enjoy the higher valuation after the renovation work is completed. But unless you know what you’re doing, the financial return might not be nearly as much as you want. Unexpected costs can lower the ROI.

Market conditions must be taken into consideration. In the case of an uncertain or slowing real estate market, buyers might not realize the appreciation they were hoping to achieve, even if they’ve sunk considerable resources into repairs. For first-time home buyers who want to use homeownership to secure their financial futures, uncertain returns could keep them up at night.

Fixer-uppers were once a symbol of hope and affordability for new homeowners. However, with the current market and the new breed of first-time home buyers, priorities have shifted. Many consumers have limited budgets and are looking to move into houses right away.

Considering that many people count their homes as their single biggest investment, it’s no wonder more and more home buyers are unwilling to bet a ton on fixer-uppers.