Home-buying is a pandemic trend that’s outlasted sourdough baking and “Tiger King.” Read: it’s still a buyer-eat-buyer world.
People are facing stiff competition when shopping for a home. In 2020, demand went up with a massive WFH movement freeing a lot of Americans to move away from the office. And housing inventory hit record lows. In 2021, home sales hit their highest level in 15 years, bringing inventory down further. Oh, and prices rose by about 20% year-over-year.
This spring, home sales have started tapering off. And demand for new mortgages in mid-May fell by 15% year-over-year. But that hasn’t made home buying easier. Many buyers are now contending with higher borrowing costs with interest rates rising. And home prices are still rising, too.
How can I compete?
If you’re hoping to say “yes” to a new address, here are a few ways you can set yourself apart.
Show them the money. In a competitive market, making an offer above the asking price isn’t uncommon. Just don't go too high, if you need a mortgage. Lenders only give you as much as an appraisal says the home is worth, so you're on the hook in cash for anything more than that. A big down payment (20% is often recommended) could make you a more attractive buyer, too.
Get pre-approved for a mortgage. By filling out an application ahead of time, you can make sure lenders know you’re responsible with your money (and will be with theirs, too). Getting pre-approved also lets you know how much home you can afford and tells sellers you're a serious buyer.
Call in a pro. Working with a real estate agent could make the road from “house hunter” to “homeowner” a lot smoother. Not only will they be able to help you find a home that meets your needs, but they help you prepare a more competitive offer and successfully negotiate with a seller.
Be flexible. Maybe that’s letting the sellers pick the closing date or stay an extra month or two, rent-free. Or maybe it's letting go of some “must-haves.” Buyers can't be choosers in a hot market.
Buying a home in a competitive market can feel like a long process. But with the right team and money strategy, you’ll be saying “home sweet home” in no time.
Updated May 19 to include the latest housing market information.