What a time to be alive. 2020 brought us a global pandemic, and 2021 brought us a crazy housing market in which home prices increased at an even faster rate than they did prior to the economic recession in 2008. Two main factors contributed to this suddenly hot housing market: 2020 saw more people working from home (and spending more time at home) than ever before, and mortgage rates dropped to an all-time historic low. However, even with so many people racing to sell their homes while prices are high, there still aren’t enough houses on the market to meet the demand. This means that even if you’re a veteran home buyer, purchasing a new home this year is going to be an experience unlike any you’ve had before.
Here’s what you can expect:
- You will need to clear your schedule. If you come across a listing for a home that you like online, you need to schedule a showing ASAP. It’s safe to assume that someone else has their eye on it, and once it’s pending sale, all scheduled showings are usually canceled. (Make sure to save it as a favorite on whichever app you use to browse — you’ll get a notification if the sale falls through and it goes back on the market.) Some homes are so in-demand that they’re doing “one weekend only” showings and just sifting through the offers they get after two days on the market. Also keep in mind that Saturday and Sunday are busy days for real estate. Any time you can schedule a showing for a popular new house on a weekday, it’s more likely that you’ll find an available time slot. Weekends fill up fast.
- You will likely have to pay over the asking price. It feels strange to write an offer on a house without haggling down the price a bit. It feels even stranger to see a house with an already inflated price and wonder how far over asking you’re going to need to go to compete with other buyers. Supply is so low and demand is so high that suddenly every offer becomes an auction of sorts, with the closing being awarded to the highest bidder. As you’re shopping, be aware that you may have to adjust your search criteria to lower your max price to account for the extra you will likely need to offer just to toss your hat into the ring.
- You will have to adjust your priorities. The current housing market will force you to spend some time reflecting on what is most important to you. Is finding your perfect dream house your top priority? Because if it is, hunker down. You may be searching for a really long time. You may have to lease an apartment for a while as you scour the listings each day to find a place that checks all of your boxes. Is your timeline the top priority? Maybe you need to close on a house QUICKLY, and time is running out. You will probably have to compromise on some of the things you were originally hoping to find in your next home. You might even have to consider this move somewhat temporary, knowing that you can sell this home and move again in a few years when the market has (hopefully) settled down.
- You will need to have your ducks in a row so that you can act quickly. It has always been a good idea to get pre-approved by a mortgage company before starting your housing search, and that principle still holds true. You’ll have a better idea of what you can realistically afford after consulting with a lender, and your offer will be taken more seriously (though maybe not as seriously as those all-cash offers from buyers out in California, am I right?). When you go to tour a house, bring someone with you who knows a thing or two about home improvement. There’s no such thing as conducting a “pre-inspection,” but having someone there to point out possible concerns will be helpful when you start getting all starry-eyed about the shiplap feature wall. Once you find a house that you like, you’re not going to have much time to mull it over, so it’s helpful to do as much legwork as you can in advance.
Buying a house in this market is not for the faint of heart, but it’s also not impossible. With some perseverance (and a really good realtor), it will only be a matter of time before you’re signing on the dotted line and holding a new set of house keys. Hang in there!