There’s a lot of advice online for homebuyers these days. But, hey, who’s got the time to do all of that research. So I’ve selected five things prospective buyers should know about purchasing your house in the next 18 months.
The real estate market is getting more competitive by the day, due to limited inventory. On the other hand, mortgage qualifications have loosened a bit and rates are still near historic lows.
Home prices have risen steadily in recent years, and they continue to do so. Mortgage rates are expected to inch upward in the coming months. Most analysts are predicting a rate increase by the fed in the fall of 2017.
With those things in mind, let’s take a look at 5 key issues:
Mortgage rates are expected to slowly climb into 2018
The Federal Reserve will be reducing the amount of mortgage-backed securities in their portfolio relatively soon – and they have hinted at another rate increase or two over the next 6 months.
In its latest forecast, the Mortgage Banker’s Association economists predicted that the average rate for a 30-year fixed mortgage loan would rise to 4.5% by the fourth quarter of 2017. Looking beyond that, they expect 30-year loan rates to rise above 5% by around the middle of 2018.
With that said, these rates are still extraordinarily low compared to historical standards.
Home prices are rising
According to Zillow, the real estate information service, the median home value across the US has risen by over 7% in the last year – and many experts see that pace staying consistent. Most economists expect prices to rise by another 6% over the next 12 months, extending into the summer of 2018.
As a result, homebuyers will encounter higher housing costs than those who purchased over the last couple of years. So be sure to research the market ahead of time, work with the right real estate agent, and go into it with a realistic view of what you can afford.
Mortgage qualification is easier today
The mortgage industry has loosened up a bit over the last two or three years. Mortgage giants Fannie Mae and Freddie Mac have relaxed debt-to-income ratios. As a result, it’s slightly easier to qualify for a mortgage loan today than it was in the past.
For example, many first-time homebuyers think they must have 20% or more ready for a down payment. But that isn’t true at all. Today, there are mortgage programs available that allow for down payments as low as 3%, or even 0% if you’re military or live in rural areas.
Don’t make assumptions about your ability to qualify for a home loan. Reach out to me, and we’ll review your situation to determine if you’re a good candidate for a home loan.
Housing inventory is getting tighter
The reason why home prices are rising has to do with inventory – or the lack of it. It’s just supply and demand at work, really.
In most cities across the west, the current supply of homes is falling short of demand.
What does this mean to the homebuyer? It means you should be prepared for some competition, and be ready to move quickly when the right house comes along.
It’s a sellers market right now
Due to the lack of inventory, this will directly impact you as the buyer. In 2017, most of the major cities across the state are experiencing sellers’ market conditions. In short, there aren’t enough homes for sale to meet the current level of demand.
This is an important factor to remember when it comes time to make an offer and negotiate with sellers. This is where the right real estate agent can really help.
The reality is that current real estate market conditions favor sellers over buyers.
My opinion is that it isn’t worth your time to haggle with the seller over the small stuff. When you find a home that meets the majority of your criteria and falls within your budget, you should move quickly with a legitimate, competitive offer.
In conclusion
With that said, this is my reading on current trends in the real estate and mortgage marketplace. The continuation of rising home prices and more-than-likely mortgage rate increases makes a compelling argument for buying a home sooner rather than later.
As always, please do contact me for more, as it would be my privilege to help you!
