Calling all homebuyers: Economists have a message for you. They say time is on your side as you prepare for your first property purchase. That’s because the supply of homes, once tighter than a drum, is gradually increasing.
“Several consecutive months of rising inventory is a positive development for consumers and could lead to slower home price appreciation,” says Lawrence Yun, the chief economist for the National Association of Realtors (realtor.org).
At Zillow, the housing data company, senior economist Aaron Terrazas says that buyers intent on purchasing a brand-new home are in a particularly advantageous position.
“More newly built homes are seeing their list prices drop,” he says.
What’s behind the shift to a more balanced market for buyers? For one thing, economic uncertainty has led to an overall decline in sales of existing homes, which plummeted 6.4 percent in December. This translates to fewer purchasers competing for the same properties.
Another factor easing pressure on would-be buyers is that mortgage rates, widely expected to soar early this year, have recently moderated, bringing them back within the range of historic lows.
What all this means for those seeking to gain a foothold on the first step of the housing ladder is that they can proceed at a reasonable pace and still find a desirable and fairly priced property. Except in the hottest markets, they have less reason to fear losing out in multiple bidding situations.
Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies,” says a slowdown in the frantic market is a positive for many young buyers who are saddled with student debt and credit card payments and need time to save for their down payment and closing costs.
But he says that even buyers who are debt-free are often better off moving cautiously toward a first-home purchase.
“Making a major housing move is analogous to a big career change. Because both can have consequences for years to come, there’s no reason for rushing into any decision you could regret later,” Tyson says.
Here are a few pointers for long lead-time buyers:
-- Locate an experienced real estate agent to guide you.
People who are moving to a new metro area are well advised to search for an agent who has years of experience selling homes in any community they’re considering, says Tom Early, a real estate broker and former president of the National Association of Exclusive Buyer Agents (naeba.org).
Before you start looking at specific properties, a strong agent will help you navigate the new locale, supplying you with data on home prices and valuation trends, relative school performance statistics and information on nearby amenities.
-- Play reporter in your quest for a desirable neighborhood.
The area where you choose to live is a major factor determining your lifestyle -- and that’s why neighborhood choice matters greatly.
“Homebuyers should always take the time they need to compare neighborhood alternatives before moving,” Tyson says.
As you develop a short list of neighborhood options, some of the most useful sources for reality-based information are people who live and work in the areas you’re considering.
What’s the best way to approach neighborhood residents? Early recommends you walk through the community on a weekend afternoon when many people are likely to be out in their yards. Tell them you admire their neighborhood and are considering a move there. Then feel free to politely pose a few questions.
“If people start giving you the cold shoulder, you can bet that neighborhood is unfriendly. For that reason alone, you may want to drop it from your list,” Early says.
Those considering a condo-apartment may find it harder to chat with a building’s residents, though some may talk to you as they enter or exit the complex. Also, an agent who lists property in that building may line up contacts for you.
-- Supplement your search with visits to open houses.
If you’re a long lead-time buyer planning a major move, you needn’t rely solely on your agent to help you sort through your choices.
“By visiting a lot of open houses, you can narrow down what you do and don’t like in a home. Eliminating options can be extremely useful in narrowing your search,” Early says.
Many open houses are heavily advertised with street signs posted by the listing agents for the properties. If you’re considering condo-apartments, however, Early suggests you consult local newspaper or online ads for open-house details.
-- Drop any agent who attempts to pressure you to buy prematurely.
Although agents are compensated on commission -- and therefore don’t make any money until a sale goes through -- a reputable one won’t try to hurry you into a purchase before you’re ready.
“It’s a big red flag if an agent starts pushing you,” Tyson says.
Of course, it’s not fair to ask the agent to spend multiple weekends over months showing you property unless you’re progressing toward your ultimate goal. Every veteran agent has had to cut ties with clients who looked continuously without any serious intention of buying.
Still, as Tyson says, it’s not unreasonable to spend up to six months doing intermittent (yet focused) outings with an agent before committing to a property purchase in an area that’s new to you.
“A reputable agent will be patient with homebuyers who are heading in the right direction and just need time,” he says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)