Whether you're a first-time homebuyer or a seasoned homeowner, buying a new home amidst economic uncertainty can be a real challenge.
Tighter real estate markets can be complex, but there are things you can do to make the process less anxiety inducing. Here are a few ideas for navigating your home-buying journey during economic uncertainty.
Find a local real estate agent
Purchasing a home is one of the biggest financial decisions you'll make in your lifetime. So it's essential to have a knowledgeable industry expert by your side to navigate you through the purchase process from start to finish.
A seasoned real estate will have the industry acumen to help you develop a purchase strategy, determine how much home you can afford, walk you through regulatory complexities, and help you avoid potentially costly mistakes.
A local real estate agent should have deep knowledge of the area where you want to buy. They should be able to answer your questions and guide you through a home purchase that works for your needs and budget.
Don’t get discouraged, get prepared
The housing market has changed dramatically over the last decade. Demand is high, inventory is low, and mortgage interest rates are high.
You may need to be patient to find your perfect dream home, but being prepared will help you be ready to pull the trigger when the perfet home presents itself.
Start by compiling all your financial documentation. Establish a budget and get a pre-approval letter from your mortgage lender. This can help jumpstart the mortgage processes and give you a better idea of how much home you can afford.
Next, continue to monitor your credit and keep your spending in check. You don’t want a new car or large credit card purchase to be the deciding factor on whether or not you can buy a new home.
Lastly, expect competition. With lower housing supply, sellers will often receive multiple offers from buyers. Keep this in mind and be realistic with your expectations.
Plan for the future
The current market may be challenging, but that doesn’t mean it will always be.
Recent data shows that the U.S. is currently short approximately 7.2 million homes. However, new construction nationwide is expected to increase by almost 5% for 2024 As more homes are built and older generations downsize or pass on, more inventory will enter the market and that should improve market conditions.
Interest rates, for example, have posed a serious challenge for homebuyers over the last few years. But experts agree that rates won't remain high forever. Buying now, with a plan to refinance later once interest rates improve, could be a strategy for buying a home now and beginning to build wealth ASAP.
Another area of concern for many home buyers is inflation. But as the Federal Reserve continues to commit to tightening inflationary pressure, affordability should also improve.
The bottom line is that market conditions are always in flux, so focus on establishing a home-buying plan that will work for you now and into the future. And be at the ready to capitalize on market changes when they happen.
Sources: Realtor.com, National Association of Realtors
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