Buying a property is both an art and a science. Like science, there are certain formulas and patterns that you need to observe, but just like art, there’s really no one-size-fits-all approach to it. The market is susceptible to changes that dictate real estate value and prices. These are then determined by the market condition, demographics, interest rates, government policies, the economy, and occasionally, global conditions just like the pandemic we’re in right now.
Given the very dynamic real estate market, as prospective house buyers, you need to know certain things to help you make a well-informed decision.
Here are some things that you should expect from the housing market this year:
There are more buyers than there are homes available.
It’s a seller’s market out there today. Nowadays, the number of buyers far outnumber the number of houses available on the market. If you find one that matches what you’re looking for, chances are you’re not the only one out to make an offer.
The pandemic has disrupted the market in ways that have affected the availability of supply. Folks are more apprehensive in selling because of the uncertainty this season brings. Having a home to live in at this time means one less thing to worry about.
For this reason, buyers need to be flexible and willing to make certain concessions if they expect to get a good deal on a property. Having a good knowledge of what concessions you can afford can help you make strong offers on a house that you like. It is recommended that you talk to a real estate agent and ask for advice and guidance on this matter.
Property prices are expected to get higher.
According to the National Association of Realtors, the Mortgage Bankers Association, Fannie Mae, and Freddie Mac, the real estate market rates are slated to go up by 3.1% in 2021.
One thing you need to keep in mind is that just like any other year, house prices will still depend on the season, with most homes selling at a higher rate during warmer months and lower prices during the colder season.
The home buying process will depend heavily on technology and digital tools.
Because the pandemic put restrictions on the way we do business, primarily due to physical distancing, the housing market will most likely continue to be highly active online. Everybody involved in the home buying process — from real estate agents to lenders to buyers — will have to cope with the present challenges and adapt to them by using technology to their advantage.
Expect to see virtual tours and open houses, Zoom meetings, and e-closings to be the new norm for deals and transactions.
Find out what credit score is acceptable and how much money should be prepared for a downpayment.
This technically doesn’t qualify as a what-to-expect but you need to know these two very important numbers so you’ll know if you can proceed with a property purchase or not.
Your credit score will play a very important role in the loan application and approval process. If you have a credit score of 700 and above, you have a good chance of getting approved. Any score below that might give you a harder time with funding from a lender.
Obviously, you also need to know how much the downpayment is on the property you’re considering. Talk to your trusted mortgage loan officer, so your questions and concerns can be addressed.
Mortgage rates will stay low.If you’re looking to buy a property at this time, this is something that will work to your advantage Since we’re still in a pandemic, economists predict that mortgage rates will continue to remain at lower-than-usual prices, following a historic drop in 2020.
The projected average of the 30-year fixed-rate mortgage is expected to drop slightly to 3% this year from 3.05% in 2020.
Lower mortgage rates mean that you can save up on a few hundred dollars monthly if you choose to buy now compared to getting a loan before the pandemic happened. Of course, even if the mortgage rates are low, you still need to do your research and shop for the best lenders that can give you the best possible rates and fees.
Given the environment that the pandemic has set, you will have a better chance of winning the house that you want if you come into the game armed with a wealth of knowledge and information. This will help you make wise decisions and eventually get in some good strong offers on a property that sellers would find hard to say “no” to.
