It’s almost that time, the busy summer moving season. In just a few short weeks, people around the country will be
packing up their homes and preparing to move for various reasons. Even with proper planning and research, the home finding/buying step is always a little stressful. Unfortunately, this year may be even tougher because in many parts of the country, there is a lack of homes for sale. We know that real estate data varies state to state, city to city, and even neighborhood to neighborhood, but according to the latest data from CoreLogic (a leading provider of consumer, financial, and property information), home prices in March were up nearly 7 percent from last year and up 2 percent from this February.
In some areas, many homeowners are still underwater, causing them to be either unable or unwilling to sell until prices rise and they gain equity. There is a lack of inventory specifically for entry-level homes. In fact, according to Zillow, there are 10 percent fewer entry-level homes compared to last year. Some markets are tighter than others including Portland, Ore. with 40 percent fewer entry-level homes and Charlotte, NC with 35 percent fewer.
But underwater homes aren’t the only issue. The lack of new home construction in some markets is another problem. If a homeowner wants to sell their home with the intention of trading up but can’t find anything that suits their needs, they just stay put, keeping their property off the market until something better shows up.
It’s an endless cycle because the lack of homes available has helped to raise rent, making investors who bought single-family homes during the downturn happy with their rental income. They’re clearly not in any hurry to sell.
So what’s a transferee to do? Real estate professionals advise that in a tight market, buyers should move quickly and make their best offer right away if they find a home they really like. However, this is definitely easier said than done. It may take your transferee losing a home or two before understanding just how aggressive they need to be. Advise your employees to be clear about what they are looking for and to be ready to make moves as soon as they find it. There’s a fine line between moving quickly being aggressive and paying too much though, so working with a professional will be key in a tight market.
Advice for Home Buyers in a Challenging Market
- Get preapproved for a mortgage: This will tell the seller that you are serious. A preapproval letter with details will do more for you than saying you are “prequalified.” A preapproval means the lender has run a credit check, verified income and has authorized a loan for a specific amount of money.
- Have a solid down payment: Your down payment is just another way to prove how serious you are as a buyer. Additionally, you can agree to requests that make life easier on the seller to make your offer more appealing. For example, if the seller asks to leave certain furniture behind, you can agree to that request even if you don’t want it.
- Cover the cost of a home inspection early: Usually, home inspections are ordered after an offer has been made and accepted but the buyer can pay for an inspection before an offer is made and remove contingencies from the offer that may follow. This can get expensive however if done for multiple homes as an inspection can range anywhere from $150-$800 depending on the level of inspection.
Things may seem a little bleak but it’s not all challenging! Mortgage rates are remaining low and it’s easy to minimize delays. Have tax returns, pay stubs and W-2 forms on hand when you meet with your lender to discuss your mortgage rate. We are just a few weeks away from the busiest time of year in terms of moving. Keep an eye on your desired markets and be ready to make moves when you find the right home.