Many are aware of the unusually competitive and complicated housing market that has continued throughout 2021. If you are a seller, this market is extremely opportunistic and advantageous. However, as a buyer, you are likely aware and dealing with the defeat of the crazy, aggressive market. Let’s discuss what this market looks like and what you can do to be a competitive buyer.
The Housing Market
The information on the housing market can be overwhelming. As the overall trends have proven promising and stable, we will present this market in a very broad, clear way. The most important points to understand are what aspects are higher than average, and what factors are lower than normal.
The factors of the housing market that are on the rise are housing prices and new home sales. Realtor.com shared the median home price for all listings has increased by 13.6 percent over last year. According to the National Association of Realtors, the median price of a single family home is leveraging around $380,000. In addition, the scarcity of construction supplies has slowed the process of new home construction. The lack of supply is the leading issue in the 2021 housing market, as the demand is extremely higher than the supply. However, there have been 8 consecutive weeks of growing numbers of new builds on the market. While this is still much lower than years before, it shows a positive upward trend.
The elements in the housing market that are lower than average are mortgage rates, housing supply, existing home sales, and days on the market. According to Freddie Mac, 30-year mortgage rates are falling below 3% for a third week in a row. With mortgage rates at record lows, many people are eager to buy a home. Troublesome to buyers, the housing supply, and especially sales of existing homes, are low. With an undersupplied market, housing buying battles and elevated home prices in the market are expected. In addition, the number of days a home is on the market is very low. Zillow reported that almost half of homes are being sold in under a week in the United States.
How to be a Competitive Buyer
Needless to say, the conditions and trends in this market are creating a daunting home buying journey. Homes are selling in under a week, sellers can choose buyers from a pool of potential candidates, bidding wars are common, and the selling price of a home is almost always exceeding the asking price. Therefore, what can you do to win these bidding battles and navigate this market successfully?
- Start off your home buying journey talking with a local mortgage lender. Job stability, home price, and other factors will affect your mortgage ability. Your lender will be able to account for these factors when you go into your home bidding war.
- The next step: get pre-approved for a mortgage. This is always a smart idea, but is especially prominent in the market today. Offers without a pre-approval are not even being considered by sellers due to all the competition.
- It is important to understand the mortgage process and what options are available to you. Your mortgage loan officer can discuss precautionary measures to take prior to your home search to avoid any unintentional actions that could impact your financing ability. With competition so heavy, it is smart to assure all your pieces are set in stone properly, so you have no issues in the process resulting in the loss of a home. Considering prices are higher than average, your loan officer can also make you aware of options available to you such as government and investor programs; your lender can help you make smart decisions to meet your homebuying aspirations.
- Recognize the market you are in and act responsibly. There are certain behaviors that you will need to implement to successfully land you a home. Normally, you may be able to search the market and look around. Therefore, you may wait to submit an offer, or might start with a lower price and raise it later. With homes selling in days and a lot of potential buyers, these normal behaviors will lose you the home. If you see a home you like, make a strong offer quick!
Now You Know
Now you should have a better grasp on the market and how you should attack this 2021 housing market. A key factor is working with a knowledgeable, local mortgage lender throughout your process. Download our DML app to get pre-approved and contact us to get connected!