It’s not only food, energy and prescription prices that are soaring. As the pandemic eases, landlords, freed from government constraint, have become emboldened to raise rents to startling levels.
“It’s a punch in the gut when you open that email from your rental office demanding a double-digit increase if you renew your lease in 2022,” says Tom Early, a consumer advocate and longtime real estate broker.
Many apartment dwellers are also fed up with the limits of life in tight quarters -- made glaringly obvious during the worst of COVID-19.
The good news is that a gradual rebalancing of the real estate market is making it somewhat easier for first-time buyers with stable jobs and solid credit scores to find a home at a reasonable price.
“For many months, homeowners wishing to sell have exercised near total domination. With bidding wars galore, it’s been a seller’s market beyond belief. But that’s starting to change,” says Early, who twice served as president of the National Association of Exclusive Buyer Agents (naeba.org).
Inflationary fears, including extraordinary recent increases in property prices, continue to trouble would-be buyers. Yet as the pandemic eases, consumer confidence rose in October, buoyed by higher wages and lower unemployment.
“Confidence has now risen to a three-month high,” says Steve Odland, CEO of the Conference Board (conference-board.org), which tracks consumer sentiment.
Of course, it’s never easy for wannabe owners to meet all the challenges involved in making a first purchase. Home prices continue to rise, albeit more slowly, and buyers in popular neighborhoods will likely continue to confront rival bidders for at least part of next year. In addition, mortgage rates could rise significantly in 2022.
Here are a few pointers for determined purchasers:
-- Search for the best quality neighborhood you can afford.
Many who’ve felt trapped in a rental unit for years get very excited when they first start shopping for a place to buy. That’s because almost any property with more square footage, a yard and a garage looks alluring to renters.
But it’s a mistake to let yourself fall in love with a particular house before you’ve checked out alternative neighborhoods to find the best one you can afford, says Michael Knight, an Illinois financial adviser affiliated with the Garrett Planning Network (garrettplanningnetwork.com).
“It’s not uncommon for people to choose a neighborhood too quickly,” says Knight, who recommends you compare several areas before making your pick.
To help with your due diligence, he says it’s wise to sit down for an informal chat with an agent who specializes in the sale of real estate in each community on your short list.
Which neighborhoods are most likely to hold or gain value in the future? Ashley Richardson, a longtime agent, says access to high-quality schools is one critical factor, along with quality public transit nearby.
“Millennials don’t want to be trapped in their cars. Maybe they’re working from home currently. But that could change if their bosses call them back to the office,” says Richardson, who sells property through the Long & Foster realty firm.
Also, she says buyers of all ages -- including boomers who are semi-retired or retired -- want to live in an area where they can easily walk to shops and restaurants. This preference for walkability has continued despite the pandemic.
How can you quickly assess whether a neighborhood is pedestrian-friendly? One way is to visit a website that rates communities for their “walk scores.” Just go to walkscore.com and type in the address of a house in the neighborhood.
-- Choose a house large enough to meet your needs for a lengthy period.
Before the pandemic, many buyers were focused on “flipping,” the practice of buying properties in hopes that they’d appreciate quickly and could then be sold for a profit.
But many who tried this game failed, teaching others a cautionary lesson about how tough it is to make speculation work.
“Forget about flipping, especially when it comes to buying a first home for your family. In any case, you wouldn’t want your children changing schools too often,” Early says.
-- Research property values before shaping an offer.
Once you’ve pinpointed a solid neighborhood and found a dream property there, you may be ready to make a bid. But Richardson says that before deciding how much to offer, you should obtain some facts and figures on recent sales in the area.
“Just as home sellers need to inform themselves on market values before pricing a property, so do buyers need to consider recent sales before shaping their bid,” she says.
To judge the realistic value of a property you wish to buy, ask your agent for statistics on homes that have sold recently -- the fresher the data, the better.
Are you seeking to buy your dream property in a popular area and know you’ll face rival bidders? In that case, Richardson says you may wish to add a small monetary sweetener to help you outdo the others.
“You don’t want to overshoot the value of the house by a huge amount. But you may wish to add perhaps $1,000 to $2,000 to your bid. If you truly love the place you’ve found, that’s not a lot of money when spread over all the years you’ll be living there,” she says.
(To contact Ellen James Martin, email her at email@example.com.)