During 2020 we saw a significant shift in the housing market, primarily due to the pandemic. As more Americans began working from home in efforts to promote more social distancing, we saw many people fleeing larger cities in favor of the suburbs. In fact, this has been referred to by some as “The Great Reshuffling”. This increased demand from buyers has certainly spilled over into 2021 and we are seeing a super competitive start to the spring home buying season. Needles to say, if you are planning to buy a home this spring it is critical that you have a plan with your real estate agent. Below we discuss a few tips to consider this spring season.
Things to consider
- Consider the long-term: As mentioned previously, the shift to many work-from-home environments for employers has allowed Americans to live virtually anywhere. With this said, it is important for home buyers to consider the long-term plans for these working environments. For example: Is the employer planning on having employees return to the office eventually? Do you plan on remaining with your current employer for the long-term? If you are planning on permanently working remotely with this employer, then it is imperative that the home you purchase has adequate home office space. In addition, if you are a growing family, you will also want to consider additional bedrooms and space to accommodate a larger family. Lastly, you should always consider your time horizon for this particular home. If you likely will be relocating again in the near future, it may not make sense to purchase a home right now.
- Develop a financial plan: As with any home search, it is imperative that buyers obtain a pre-qualification from a lender. This will not only be a required step in the home-buying process, but it will also better guide you on what price points to consider in your home search. In addition, lenders have become more strict in recent years so it is important that buyers do not make any large financial or purchasing decisions prior to buying a home. For example, taking on a new car payment just before embarking on a home search could negatively impact your debt-to-income ratio. Lastly, the current competitive market is resulting in many cash buyers entering bidding wars on properties. If you are in a position with a tight budget, you may want to consider homes priced around $50,000 less than your limit to account for any potential bidding wars.
- Determine the best timeline: Although mortgage rates are currently low and beginning to rise, they are still expected to remain relatively low for the foreseeable future. With this said, the record number spring home buyer demand combined with the extremely low inventory of homes for sale results in a difficult market. For some buyers, it may make more sense to focus on saving more money over the next several months with a plan to begin their home search later in the year. A best practice is to weigh the advantages and disadvantages of buying now vs buying later in the year. A local and knowledgeable real estate agent should be able to guide you in this analysis.
Summary
It is always advisable to remove any emotion during the home buying process. Of course, this is often easier said than done. During hot real estate markets like the one that we are currently witnessing, it is easy for many people to feel like they will be priced out if they do not act soon. Although this may be the case in the near future, it is important to remember that home prices can not continue to always grow at their current pace. Furthermore, financial situations may improve for many buyers particularly as they enter their peak earning years. In some cases, simply waiting a year can result in a completely different home search due to an improved financial situation.
Are you considering the purchase of a home this year? If so, we can help. Contact Live South Florida Realty, Inc. for a free consultation today. We have assisted many buyers throughout the South Florida market and look forward to assisting you as well.
