When the Federal Reserve boosted interest rates last month, it was just the latest blow to potential new homeowners. Already, the supply of new houses is low, and construction costs have climbed in recent months, pushing up new home prices.
So it’s no wonder that shoppers might feel snakebit when they look for a home, only to find that they suddenly can’t afford it or that it’s already moved to a bigger spender.
“The housing supply is low. Interest rates are rising. And even Canada plays a foil: Tariffs on lumber have sent the price of construction sharply higher,” proclaims The Washington Post in a piece published June 13.
That makes it a sellers’ market right now.
But all is not lost, wannabe home buyers. Here are three concrete things you can do to win a sale, even in this climate.
Know Your Baseline
Before you start down the path to a new house, make sure now is the time for you to buy. Sure, that sounds obvious. But that means chatting with your spouse and any other stakeholders under your roof to make sure everyone’s on board, in case a deal goes through (and knowing full well that one might not).
If you determine that now really is the time, the next step is to know your buying power before you get to the fun part of looking for the house. Know what can you afford to put down as a downpayment and what a bank is willing to loan you.
“Be as prepared as you can,” Keith Gumbinger, vice president of mortgage website HSH.com, tells CNN. “Get your credit as high as it can be, get your loan paperwork in order and easy to get to.”
Depending on your market, you might be pleasantly surprised with what you can actually afford. Or you may be disappointed with that figure — which may mean tabling the purchase for a while.
Just understand that it may be a long while. Experts don’t think this is a housing bubble. Prices will continue to rise, but perhaps not at that exponential rates that major metro areas have seen — like Seattle, which just saw a 14-percent climb in prices in one year. Outliers aside, when adjusted for inflation, prices are actually below peak, says MarketWatch.
Once your homework is done, you’re poised to buy.
Don’t jump at everything. You want this to be your house for a long time, so it needs to be a place that meets most of your wants and needs.
But the market is bound to get tighter. The National Association of Home Builders anticipates that 300,000 fewer homes will be built in 2018 than needed to keep up with population growth, job creation and replacement of old homes.
So you need to be decisive when you find a place that meets your most important wants and needs. Strike quickly.
Tie yourself to a Realtor with a team who knows your ideal neighborhoods — and all the ins and outs that come with it. (We happen to know one for Decatur.) Is that new listing in a much-sought area or a softer one? How does this place stack up with nearby comps? What about schools? If you or your real estate pros already know the answers to these questions as you find potential targets, you can save a day or more when purchases are being decided in hours.
Don’t Miss Listings
There’s maybe no better way for a home shopper to spend a Sunday afternoon than by driving neighborhoods you like and looking for For Sale signs. So get on out there!
Google alerts and Zillow listings are also fine shopping aids, but as we recently pointed out, web-based listing services can be delayed by days or even a week.
Go one better: Carter & Associates offers a service that pushes you real-time alerts for new listings based on preferences you determine.
We’ll help you define the criteria that make a listing a potential dream home and create a custom search profile for you that informs you about matching listings as soon as they are listed. You’ll learn about the property literally as soon as Realtors do. Learn more about this service, which you can try for free.
Don’t forget one of the most important things: Buying a new house should be fun.
Just make sure you’ve done these simple preliminary tasks — which a quality real estate team can help you with — you’re ready for the ride. Enjoy it.