Data released by the S&P CoreLogic Case Shiller on May 25 shows that home prices are rising, having increased by 13.2 percent from March last year, according to a report on Bloomberg. Jerry Howard, CEO of the National Association of Home Builders, says, “Everyone expected the housing market to crash with the rest of the economy.” However, we have witnessed the opposite. With property prices skyrocketing and inventory at a record low, nobody knows when the housing boom will stop. That’s because many factors are at play, such as high property demand meeting limited supply, and mortgage rates are still at a historic low, fueling property purchases despite surging prices.
According to Freddie Mac, the average 30-year mortgage rates plunged below 3 percent in the last week of May. While purchasing a home in a hot seller’s market can be challenging, there is a possibility of getting your offer accepted in a place you desire. Below are tips to navigate the booming property market.
Do your due diligence
Before investing in residential property, take some time to research what’s available in the market. You can start by viewing a few homes listed for sale in desired neighborhoods. Also, explore real estate websites for new property listings and be sure to check how long homes have been on sale before a contract has been pending. Doing so can be beneficial because properties don’t stay long on listings in a hot real estate market. Another important aspect worth checking is the home selling price versus the listing price to get a sense of how hot the property market is without setting an offer.
Learn what it takes to make a competitive offer
A hot property market is competitive, and the inventory is low, so you need to utilize everything that will set you apart from other home buyers. Making a cash offer on homes is a sure way of attracting the attention of sellers. Even if you haven’t saved enough money to make an all-cash offer, paying a larger down payment entices sellers. Alternatively, you can make a backup offer, especially if you love a home and the sale is pending. Many homeowners win backup offers by waiting for contingencies like inspections, buyer’s financing approval, and appraisal. These aspects kill home sales, increasing the chances of sellers accepting backup offers.
Plan your finances
It’s easy to get tempted into increasing your offer if you like a specific property and feel that you’re running short on time. Real estate experts advise not to let emotions and short time frames lead you into making bad financial decisions. Instead, review your finances and set a budget. Doing so helps you stick to a home that fits your budget and needs. It also pays to compare mortgage rates and get pre-approved if you choose the mortgage route. In a seller’s market, getting pre-approved for a mortgage is enough proof you’re a serious buyer. This alone could increase the chances of your offer being accepted.
Purchasing a home has never been easy, and now that the real estate market is booming, the process can be more tricky. A seller’s market means more competition, high prices, and limited supply. Nonetheless, you can own your dream home if you research the market carefully, plan your finances, and know what it takes to make competitive offers.