After facing more than two years of ridiculously intense competition for property, homebuyers are starting to experience a more “normal” market.
“The crazy buyers -- the ones who bid way, way over asking price -- have already bought a place, closed and moved in. Who’s left to buy are real-life people with more financial constraints,” says Stacy Berman, a longtime real estate agent and blogger.
Unfortunately for buyers, the lessening of competition is not due to any moderation in home prices. In most popular neighborhoods, prices are stabilizing at very high levels. The more important factor is that rising mortgage rates have priced more buyers out of the market.
“Rates have jumped so fast, they’ve cut into affordability. That’s putting a lot of pressure on buyers,” Berman says.
If there’s any good news for buyers, it is that the inventory of available homes -- once tight as a drum -- is ever so gradually increasing.
New listings are “up 4% above one year ago. Active inventory is growing for the first time since 2019,” says Danielle Hale, chief economist for Realtor.com, the home listing company.
Buyers with solid jobs, good credit and healthy bank accounts are now in a somewhat better position to make a home purchase with less pressure and stress than they would have endured earlier in the pandemic.
Take the true tale of a landscape architect in his late 30s who has yet to buy his first home. From his father, the man received a large cash gift for use as a down payment. But he’s been waiting on the sidelines for a slowdown in the market before venturing a bid on the sort of property that could accommodate the plant nursery he’s hoping to start.
Mark Nash, a longtime real estate broker and the author of “1001 Tips For Buying and Selling a Home,” urges purchasers to take full advantage of the slight slowdown in sales to make reasoned decisions about their housing.
“In all but the most red-hot areas, there should now be more time to investigate your options, making sure you select a home you could hold for years. There’s no point in scoring the winning bid for a place that won’t meet your wants and needs going forward,” Nash says.
During the worst of the pandemic, when bidding wars were most intense, many purchasers wrote offers that dropped the home inspection contingency. But Nash says that’s less likely to be necessary going forward.
“Try your best to get that professional home inspection. It’s particularly crucial if you’re buying an older home that could have serious problems,” Nash says.
Here are a few other pointers for buyers:
-- Talk through your plans with family members who are assisting.
Many novice purchasers, especially those in their 20s and early 30s, accept parental gifts to help realize their homeownership goal.
“Often, there are a lot of strings attached when the family steps in. There are big control issues, and parental influence can lead to bad decisions,” Nash says.
He’s noticed that some parents -- eager to boast that their children live in a prestigious neighborhood -- will encourage them to buy beyond their self-imposed limits.
Before you accept family help, you need to know if your parents think this gives them veto rights over your home choice.
“A heart-to-heart talk can really help you avert this problem before it arises,” Nash says.
-- Ask plenty of questions before picking a place.
Buying a home is much different from buying a car. All new Honda Accords are basically the same, no matter the dealer or source, for example.
But each home is likely to have unique qualities. Even in brand-new subdivisions, floor plans and lot settings vary. And the disparities are still greater in older communities, where properties may have changed hands several times. Upkeep differs from owner to owner.
Of course, you’ll want to find a reputable home inspector to scrutinize any property you plan to buy. But even before you reach that stage, you should pose plenty of questions about the home and the community where it’s situated, says Merrill Ottwein, a Coldwell Banker broker and past president of the National Association of Exclusive Buyer Agents (naeba.org).
“I always tell folks to walk the community before deciding whether you’d like to live there,” Ottwein says.
Residents can forewarn you about the annoying freight trains that pass through or the jets with flight paths overhead. They can also tell you about unpleasant traffic problems and issues facing the local schools.
“Information is power, and that’s especially true when you’re selecting a home,” Ottwein says.
-- Slow down the selection process.
Some longtime renters get so keyed up at the idea of homeownership that they rush into the wrong purchase.
“With all this excitement and newness around their plans, they stop thinking straight,” Nash says.
To help guard against the tendency to plunge headlong into a purchase, Nash suggests that first-time buyers look at multiple properties during a shopping tour, even if they fall in love with the first place they see.
“And don’t work with any agent who pressures you into thinking that every house you see is a ‘home run.’ Think for yourself when choosing a place,” he says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)