We always hear about buyers' markets and sellers' markets in real estate – but do you know which one we are in right now? Well, this may depend on where you are buying or selling, but my experience over the last few months is that we are in the middle of a BIG TIME shift that we have been awaiting for eight years. Now if you are in the market to buy a home this year, don’t let this scare you. In fact, it may be the most opportunistic time to buy in years!
Let’s explore this first with a few simple observations…..
- There is a shortage of inventory on the market right now. Although the number of homes for sale fluctuates by area and neighborhood, there are 5 buyers for every 2 houses on the market right now. Naturally by supply and demand, this creates competition and drives prices up. The good news is that with the spring market comes a lot of new inventory, so buyers who are prepared will be in the driver’s seat.
- There are more cash buyers in the market this year, which also drives up prices, without the appraisal contingencies to worry about.
- Interest rates on the rise – The Fed has tapered its stimulus from $85 billion to $65 billion in monthly purchasing of mortgage backed securities. This has resulted in higher rates, as we saw last fall when rates went from the 3’s to the 4’s overnight. As we see the economy improve coupled with further Fed tapering, rates will continue to go up, creating more urgency from buyers.
OK – So Why is this Good News for Everyone?
For buyers, the cost of money is still cheap. With the national average FHA 30 year fixed rates below 4% and Conventional 30 year fixed rate just above 4%, getting in now is KEY. As mortgage rates rise, so do interest rates on your savings and other investments. Locking in on a low fixed rate while all other rates go up gives you the best of both worlds.
Also, lenders are expanding product offerings. We are starting to see more options for Conventional loans like old the 80/10/10, and 5% down with No Monthly PMI.
Sellers who may have not been able to sell for the last few years, or were previously unwilling to sell in a down market, will now be reconsidering the move since they may be able to get more for their home than they did last year or the year before.
Buyers – Be Prepared!
If you are in the market to buy a home this year, start by talking to a lender NOW. Actually, talk to a couple lenders.
- Find out what you qualify for before you start looking at houses. The last thing you want to do is find your dream home, and then lose it to another buyer because you haven’t gotten your ducks in a row. If you are scrambling at the last minute to secure a loan, you might not make the best choice in lender or loan type.
- If you are a 1st time homebuyer, you may be eligible for FREE money toward down payment and closing costs. That’s right – FREE Money! Not all lenders participate in all programs, so make sure you get hooked up with a knowledgeable lender.
- Have your lender show you on paper how one loan compares with another, what the costs are, and how each loan option affects your cash out-of-pocket and monthly payment. The loan that your friend, family member, or co-worker got may not be the right loan for you.
- If you are having a hard time understanding the information being given to you by your lender, don’t be afraid to ask questions until you do understand. For most people, this is the largest obligation you will take on, and you should make sure you make informed decisions.
This is a very exciting time for anyone buying or selling a home. Having a dedicated, caring, competent lender makes all the difference.
Please call or
email me if you would like more information on mortgage products and getting pre-approved so you are prepared when you or your client find your home of choice.
