Heading into 2022 had many expecting the market, which peaked at 20% in August 2021 to cool or decelerate. In December 2021, Zillow predicted that the market would decelerate 11% by the end of the 2022 year. However, as the market continued through January and February, Zillow revised their estimate to state that there will actually be a peak at 21.6% in May and a close to the year at 17.3%. So rather than decelerating, the market appears to be continuing to rise. What does all this mean for a buyer in this market? Well, if you are in the market right now, you have experienced first hand the stress of a declining supply- less inventory or homes on the market. This lack of inventory has created an environment of struggle to find listings in the right price point with meeting the right criteria. If buyers find a home they like, it often goes quickly off the market and many buyers are forced to increase bids if they hope to land the home.
If the prediction by Zillow is correct and the rate of home price growth does hit 21.6% in May, it would mark the highest since the 1980s. It would be the well above the peak 12-month price jump (14.4%) recorded prior to the 2008 housing crash. Not everyone in the industry agrees with Zillow. CoreLogic only foresees increases of 3.5% and FannieMae an acceleration of 7.6%. The variation of predictions directly relate to the fact that mortgage rates have been increasing. Whether the market accelerates 3.5% or 21.6%, everyone can agree that the market is not cooling and inventory will continue to be limited throughout early 2022. Following are some tips for buyers trying to buy in this market.
1. Get Prequalified. Get your financials all completed so that you know your price point and if you see a house you like, you will be ready to move on an offer immediately.
2. Select a Realtor to work as your Buyer’s Agent. They can be watching the New and Active listings and can notify you immediately when something is available. They may also know of things that are going to be coming on the market before they actually list, giving you an edge over other buyers.
3. Know your bid range. Be ready to flex on your offer price if the home you want has multiple offers.
4. Talk with your agent about other ways to make your offer competitive over other offers. If you are working with an experienced agent, they can navigate you through those options. These options would include playing with your earnest money and down payment amounts, playing with closing costs and closing date or even waiving some inspections to streamline the process for the seller. You would only want to do this if you felt comfortable doing so, but it could potentially push your offer above some others on the table. Discuss your options with your experienced Realtor.
5. Be flexible. In a seller’s market there will be a certain amount of flexing you will need to do when it comes to inspections and negotiations then you would otherwise have done in a buyer’s market.
Are you a first time homebuyer? The time-honored question that every adult faces at some point is “Should I rent or buy?” While it’s true that there are certain costs involved with home ownership that you will not have with a rent payment. However, due to the nature of equity, the pros to buying a place to call your own far outweigh the cons. Here are some tips that make it easy to decide!
1. Are you going to be staying in the same place for at least 5 years? Then buying a home could make sense. If you plan to nomadically move around, or travel a lot for work, then the hassle of owning (i.e. selling and buying often) would not be worth it. Plus, you may not get the equity or investment back out of the home if you are turning around to sell after just recently purchasing. But if you are planning to stay in one place for a while, there is no doubt about the benefits that come from investing into home ownership. Building equity can help set you up to take that next step into a bigger purchase or even just providing you with an asset that could be rented out, giving you some passive income!
2. Can your budget accommodate the mortgage payment? Take a look at the cost of renting vs buying. It’s true that a mortgage payment may be higher than rent. There will be certain expenses added to your mortgage payment that may include property taxes, homeowners insurance and mortgage insurance etc… However, if your budget allows, the mortgage payment will actually allow you to build equity and acquire a tangible asset! When renting, you’ll never see the money you spent in rent payments ever again. Just imagine every month that rent payment is money flushed down the toilet, while the house payment over time is providing a huge return on your investment! Owning your home ensures you can build wealth by eventually attaining an asset that can be passed down, rented out or used as equity into your next home purchase. So, it’s worth the time to seriously consider the cost of rent vs a mortgage payment.
3. Weigh the risks and costs of maintenance and upkeep costs. There are certainly increased maintenance and upkeep expenses that come with home ownership. There will be things you will need to do to keep the home in top condition. Things like checking air filters, testing fire alarms, landscaping, painting, fixing plumbing or electrical issues. These are things that should be allotted time and money for when considering a home purchase. However, if you are prepared for a certain amount of upkeep/maintenance, it can be VERY rewarding to have a place your very own, that has your stamp on it. Renting a place often comes with a laundry list of restrictions, leaving you unable to do remodeling or redecorating. But home ownership allows you a sense of freedom, and the ability to mold your home to your tastes.
4. Do you have the startup capital needed for purchasing a house? So, you have determined that, yes, you plan to stay in one place for a while. You also feel comfortable in your budget with a mortgage payment and additional allowance for maintenance and upkeep. Then, of course home ownership is a given! However, you should consider the upfront costs to buying a home. You will need to be prepared for a down payment, moving costs, buying new furniture, closing costs, realtor’s fees etc… The great thing today is that if you are a first time home buyer, there are many programs and loan options out there available to help you with startup capital! So, if you don’t have a down payment, don’t let that hold you back. Finding a knowledgeable lender that can help you assess loan options like USDA/RD, VA, and FHA can help you navigate your options. There are also financial assistance options available here in Wyoming for downpayment assistance and closing costs!
So, if you feel that you are ready to own a home, reach out today for a free consultation and discussion! I would be happy to help talk you through the steps above and get you connected with the right lender. And remember- there are many financial assistance options available for first time home buyers! Reach out- let’s chat!
Every year there are a small percentage of individuals who list their homes for sale by owner (FSBO). However, according to the National Association of Realtors® (NAR), selling without an agent is more time consuming and difficult. Many deals fall through without the help of a fiduciary agent working for you! Here’s a few helpful tips that an agent will bring to the table:
#1 Industry Know-how
As everyone knows- when it comes to delving into an industry or skill that is unknown to you, it can be difficult to know where to start! It takes hours of research and time to gain the experience that an agent already has at their disposal. An agent can move you more quickly through the basics of the process and even further through the legalities of the forms.
#2 Negotiation Skills
When it comes to buyers approaching a seller, everyone wants fairness. Finding that happy medium and equality is where good negotiation comes into play. Realtors® have mastered the art of negotiating so that sellers receive fair market price for their homes, while buyers feel they are paying a fair price for their purchase.
#3 Confusing Paperwork Handled
Instead of spending hours of research learning how to navigate the legalese in forms and contracts, turn that over to your agent! They can explain everything to you in terms that is easy to understand. You can have reassurance that legally nothing will be missed or overlooked in the real estate transaction.
#4 Working For You
As a buyer’s or seller’s agent, the REALTOR® has a fiduciary responsibility to you! That means, they will have your best interest in mind. That includes loyalty and confidentiality. It can be a huge relief to know that your REALTOR® brings not only marketing experience and knowledge, but they will have the expert opinion to have your back.