Summer 2018: A persistently strong economy, low unemployment, burgeoning Millennial buyers, and a high savings rate, combine with low mortgage rates to make the housing market very appealing for most home buyers. Home sales continued to fall in April and May but only due to shortages in available homes, not lack of interest. This means the competition for homes will get intense this summer.
Home prices are rising but a lack of listings are keeping sales lower than one would expect in a market with this much demand. It’s been 35 straight months of declines in homes for sale. Sellers are demanding record prices while first time buyers can’t afford them, and new construction is focused heavily on the higher-end homes which prices many buyers out of the market for them.
Interestingly, home-buying demand remains robust in the face of shortages. The steady build-up in household formations following the recession continues. Many new households have not purchased yet, as evidenced by the still historically low home ownership rate. Newly listed homes are finding buyers quickly. In March of 2018, half of newly listed homes found a buyer and signed a contract within a month. That’s great news if you’re a seller, but if you’re looking to buy, here are some tips to make the search easier in this tight market.
First off, don’t waste time searching for that overlooked hidden gem. In rising markets, there’s one thing that’s fairly certain: the properties for sale have been thoroughly picked over. You need to have realistic expectations and if you expect to find a bargain, you not only risk wasting a lot of valuable time, but odds are, you will ultimately end up frustrated and disappointed.
However, searching off the beaten path may benefit you. Avoid high profile areas and search for smaller, less known communities on the outskirts of your chosen city. A slightly longer commute is a small price to pay for a property you love and/or a more affordable mortgage.
Additionally, when affordable houses are few and far between, it’s important to stay on top of new listings and be ready to pounce right away. A great way to do this is by creating alerts on property listing sites. That way, you are notified when new homes that meet your criteria come onto the market and you can arrange a viewing right away.
A proactive realtor can be a huge help, as they have more resources and connections than you do. This gives them the ability to be certain you’re the first person in the door, which in turn allows you the opportunity to make the first offer.
Be prepared to house-hunt and buy during the off seasons. In the winter, the market tends to slow down as the holidays approach. Sellers whose houses have been on the market for a while are more willing to negotiate as the end of the year approaches. Waiting to find a property in the fall could spare you the bidding wars and stress of the busy spring real estate season.
Another creative idea, if you’re open to it, is buying a multi-family home. It might not be what you had in mind, but this can be a great way to get a taste of home ownership while also allowing you to earn some money on the side. Ray Rodriguez, regional mortgage sales manager for TD Bank says, “Multi-family homes are often priced higher, but if you buy a three- or four-unit home and rent out the other units, your monthly expenditure could be the same as renting,” says Rodriguez. “And often, you can use the projected rental income from the other units to help you qualify for the mortgage.”
Above all, be aggressive and proactive. Work with a realtor but also keep your eyes and ears open. Ask around, in neighborhood groups or on social media if anyone knows of a house about to hit the market, search “for sale by owner” sites and Craigslist, and leave no stone unturned. “If you see an abandoned home, contact the seller,” Davis says “Ask in local real estate Facebook groups if anyone is looking to sell. Ask everyone you know if they know anyone looking to sell.”
Whatever you do, don’t give up. You can become a homeowner in any kind of housing market, even with a smaller income. The lower availability just means it may simply require more time and patience than it would otherwise. Before you start shopping, don’t forget to get pre-approved for a loan through a bank or credit union, and check your credit before you begin to make sure it’s in good shape.
Once you’ve made your offer, Setco Title Services would love to help guide your path to the closing table. We enjoy assisting our clients every step of the way as they acquire the home of their dreams, in any market. We have a great relationship with our realtors, buyers, and sellers because we care about your experience and want to make the process as low-stress and hassle-free as possible.
If you have any questions about real estate contracts, title insurance, our custom services or the closing process, please click below to contact us at one of our local offices.
Our friendly title professionals will be happy to assist you.