For today's homebuyers, time and money are everything
Understanding and navigating today's real estate market can be challenging. Here's what you need to know.
Today’s imbalanced market gives home sellers the upper hand in most U.S. cities and is creating a unique set of challenges. The collision of historically low, although rising, mortgage rates with low inventory and soaring prices sets the stage for a clash between demand and supply that makes red hot commodities of homebuyers’ time and money.
Current challenges for homebuyers include:
The Fed’s recent move to enact incremental rate increases may serve to balance market conditions over time, but recent data reveal home prices are continuing an unabated march to record levels.
Home prices nationally rose 19.2% year over year in January 2022, up from 18.9% in December 2021, according to the S&P CoreLogic Case-Shiller Index. The 10-city composite annual increase was 17.5%, up from 17.1% in the previous month. The 20-city composite rose 19.1%, up from 18.6% in December.
Phoenix, Tampa, and Miami saw the biggest annual gains at 32.6%, 30.8% and 28.1%, respectively. Sixteen of the 20 cities reported higher price increases in the year ended in January 2022 versus the year ended in December 2021. Washington, D.C., Minneapolis and Chicago saw the smallest annual gains, although they were all still up double digits from a year ago.
How to adapt
Considering sharply increasing home values and the need of ordinary homebuyers to compete with investors for limited inventory, it is important for homebuyers to consider creative strategies for purchasing.
First, consider the time factor. It is routine today for buyers to bid on multiple properties before landing a contract that sticks. Recognizing that market conditions may increase the time it takes to secure a home purchase, buyers should have temporary or interim housing planned for longer than usual.
Next, consider the money. With more time to purchase also comes more expense, so homebuyers should also freshly consider the allocation of financial resources as well.
Given the extreme demands of the current seller’s market, home purchasing strategies are changing.
Read on to learn how these homebuyers purchased their homes without a twenty percent down payment.