Today’s housing market isn’t easy to navigate. Here’s how to approach it from a buyer’s standpoint.
With mortgage rates sitting at record lows, now’s a great time to buy a home. Or is it?
While mortgage rates may be nice and competitive, home prices are anything but. The median price of a home sold in December was $309,800. That’s a 12.9% increase from the previous year.
Not only are homes selling at a much higher price point than they were a year ago, but there’s also very little inventory to choose from. As of the end of December, there were just 1.07 million homes for sale in the U.S., which is the lowest number of available homes on record since 1999. It’s not surprising, then, that a lot of potential buyers are having a hard time finding great homes or getting their offers accepted given the competition at hand.
If you’re hoping to buy a home today, it’ll take some careful planning. Here are some strategies to consider employing.
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1. Wait till spring
Most years, housing inventory tends to open up a lot in spring, and this year may be no exception. Granted, there’s still a pandemic at play, but by springtime, it could be the case that coronavirus vaccines are widely available. That could, in turn, make more sellers comfortable with the idea of listing their homes. Once housing inventory picks up, you may have an easier time finding a home at a price point you’re comfortable with. Or, you may simply benefit from having more options to choose from.
2. Get pre-approved for a mortgage
In a tight housing market like the one we’re in, buyers often need to go the extra mile to get an offer accepted. And getting preapproved for a mortgage is a good way to improve your odds. Mortgage pre-approval doesn’t guarantee you a home loan, but it does mean a lender has reviewed your financial information and has determined that you can afford a home loan in a specific amount. Just as important, mortgage pre-approval sends a message to sellers that you’re a serious buyer in a strong financial position to actually make good on an offer you present.
3. Be flexible with your closing date
You may find a seller in today’s market who’s eager to move and wants to wrap up a sale as quickly as possible. Or, you may find a seller who needs a delayed closing — say, to allow his or her children to finish out the school year. No matter the circumstances, a seller is more likely to accept an offer you make on a home if you’re willing to be flexible with a closing date and accommodate that seller’s needs.
Buying a home today can be a frustrating experience. Even if you have no trouble qualifying for a mortgage at a great rate, you may run into trouble due to the fact that there aren’t enough homes to buy. But try not to get discouraged. With a little patience and the right strategy, you too can join the ranks of people who make 2021 the year they buy a home of their own.