With relatively low mortgage rates and more people reassessing working from home, the housing market has been exploding. Freelancers, entrepreneurs, and everyday employees are in need of new homes or home offices. As the market explodes, housing costs have increased, and the number of available homes has decreased. The way this impacts aspiring homeowners, real estate entrepreneurs, and our market leaves many riddled with questions.
Should I wait to jump in the housing market?
The insane offer expectations and pressure to make rapid decisions, make the process daunting. For this reason, some are starting to wonder if it would be better to just wait the hot market out. Mortgage rates are low, but is now the only chance to take advantage of this? There has been speculation that the mortgage rates will begin increasing slowly. Despite projections of market researchers, the Federal Reserve has stated it will seek a low-interest rate policy for the next two to three years.
The Federal Reserve’s claim could be reassuring. We can expect low-interest rates to continue, but don’t expect them to remain as low as they have been. The country saw rates hit a low of 2.65% the beginning of this year, but as the world rebounds from COVID we can expect slight increases over time. If you are financially prepared and want to lock in a historically low rate for the next 15-to-30 years, now could be ideal. However, if you need more time to prepare, you could likely still take advantage of low rates if you purchase within the next couple of years.
How can I handle the housing market?
You’ve decided you can’t or don’t want to wait it out, now you need to get ready. The initial step is to get prequalified by a bank. It could seem to be a premature step when you haven’t found a property yet, but in this market, homes don’t remain available for long. As soon as you find a property that meets your personal or business needs, you’ll need the prequalification in order to make any offers. This should go without saying and really is a step zero, save for your down payment and closing costs. The reason this is important is due to the speed of the transaction. You’ll need to be ready to start your due diligence and be prepared to close on the property within a 45-day period.
With your funds and your prequalification in tow, it’d be wise to find yourself a buyer’s agent. A buyer’s agent isn’t the real estate agent that lists homes, but a person that will act solely on your behalf. You seek a lawyer to advise you if you have to go to court, it should be the same with such an important purchase. Having this agent represent you ensures that you have someone who understands the market and can help you find what meets your needs. This professional can answer any questions you have and walk alongside you through the entire process. This makes a challenging task a lot lighter and allows you to be more informed.
Who’s being left out?
As people are looking for homes and the availability decreases daily, many folks are left out. This leaves families struggling to find homes and others even rendered homeless. Not only does the number of houses available cause a strain, it causes the remaining properties to increase in price. This is driving what is now being referred to as the affordability crisis.
Along with families seeking homes there are real estate investors. These investors could offer significantly above the asking price for a property which would be unreasonable for the average family to match. A family trying to match that, they would be left assessing how to pay the difference. Many mortgages will finance up to 100% of the asking price and not necessarily your offering price. Those that aren’t prepared for this have no other choice but to consider waiting or adjusting their search.
Whether you desire a new home or investment, don’t feel rushed to make a purchase before 2021 ends. It’s likely the housing market isn’t crashing soon however we may have gotten past the peak.
Have ideas about a potential housing crash or crisis? Share your thoughts in the comments below.
This article originally published on GREY Journal.