It was not that long ago that folks stayed in their homes maybe 5 years and then moved on – those were the numbers when that type of data collection started in the ‘80’s. Now the number is around 10 years – double! We have gone through a market adjustment where homes prices fell radically, a market where many homes owners went upside-down, and now a market where supply and demand is radically out of sync. Many folks hesitate to move on or move up for fear of not being able to find a new home that meets their needs if they sell. So people are staying in place longer!
For quite a while now, I have been recommending new construction. I have personally gone that route and I believe in it as a viable option. There are so many advantages, not the least of which is getting what you want in your area of choice. Of course there will be a wait of maybe 5 months or more but, that gives you plenty of time to prepare your home for sale in order to get the best price. We’ll talk about the best renovation options in the next section
Sometimes, homes have not been upgraded in years. Listing and selling a home that is out of date impacts the sales price – and can dramatically reduce the price that the house is ultimately sold for. Investing in certain renovations can turn the table and result not only a higher sales price, but a home that sells in a shorter amount of time. Properly done, it gives a competitive selling advantage and makes your home more desirable. The question becomes which renovation choices bring the best return (ROI). Have a look at the chart and the linked report for more on this subject
I am going to suggest you click through the link to see two graphs associated with this posting. The graphs are about the supply and demand of resale homes on the market. It is suggested that a 6 month supply of existing homes is market neutral. A shift in either direction tilts to a buyers’ market or a sellers’ market. Given that there is a shortage in homes right now, this is a sellers’ market and that tends to push prices up.
There are varying theories on why home prices continue to rise, but I strongly believe it boils down to the shortage of resale homes and that new construction has not been able to keep up. Take a look at any type of market – outside housing – same story, supply and demand affects prices. Will we see a dramatic shift soon? I doubt it. It is a great time to buy and invest – and a great time to sell, take your profits and reinvest or, if it is time for a lifestyle change, to use the investment proceeds to do that as well
it is much easier to get a mortgage today that it was just a few years ago. Is it as easy as it was a decade or so ago - no way! Lots of folks got burned when credit was too easy. Safeguards have been put in place and the decision making is more rational. But, for a viable housing market and a strong economy, an easing of credit restrictions had to happen. More buyers today put down less than 20% to finance a home. The credit scores necessary for approval are lower than they were. And, there are an increased number of low down payment programs available.
Some folks are interpreting these relaxed changes as a road to another bubble. Fear from the last time adds fuel to the theory that we are headed in that direction. I think not. Better monitors are in place today as are standards that are incredibly different. We do not see irresponsible lending. We do see tighter standards and better judgment
So how do you prepare to deal with a tight market when you are looking to buy a home?
First, make that an absolute first – is find out how much you can be approved for. That means looking at your budget and deciding what you can afford and then talking with a mortgage person who will work with you to qualify you for a certain amount. And, let me add an additional thought here – just because you are qualified for X does not mean you have to spend that amount. I find this true for first time buyers especially. Your lifestyle is important and having enough money to live it at the end of the day may be best served with a lower mortgage!
Back on track. Once you are approved then time to shop and decide what house works for you. When you find that house, be ready to act. If you don’t someone else may! Working with your agent, make a good offer – and still be ready to negotiate. You may make a very good offer – and the seller may want something else. It is a sellers’ market. Best to decide in advance how much you are willing to negotiate – and react fast – if you really want that home