Are you having a hard time finding a home that fits your budget, needs and tastes? This article has simple tips on how to buy a home in a tight real estate market…
You are not alone because many home buyers are having a tough time finding a property due to the low inventory issue.
According to NAR’s Profile of Home Buyers & Sellers, the average length of time that a household owns a home was 10 years in 2017. This is the same as 2014 and 2016. But way back in 1985, home owners lived in their properties for an average of 5 years.
What has lead to this dramatic shift in how long people own a home?
Consider this snippet from a recent Wall Street Journal article:
Americans aren’t moving in part because inventory levels have fallen near multidecade lows and home prices have risen to records. Many homeowners are choosing to stay and renovate, in turn making it more difficult for renters to enter the market.
A balanced, normal real estate market will have a 6-7 month supply of homes for sale. Nationally, there hasn’t been that much inventory since 2012! Over the past year, the number of homes for sale has been between a 3.5 to 4.4-month supply.
This means that home prices have grown and buyers are finding lots of competition for a limited number of homes. Check out the chart showing the impact of inventory on home prices:
The lack of inventory has created a situation where home owners are not trading up or moving. This has made the tight inventory situation get worse…
What Can You Do to Find a Home in a Tight Housing Market?
If you’re like many home buyers and having difficulty finding a good selection of homes, here are some tips for dealing with a limited number of homes for sale:
First, you need to be properly prepared so you can act quickly! This means already having a Pre-Approval Letter and setting your home buying budget!
After you have your financing lined up, you must commit to working with a Buyers Agent to ensure you do not find out about homes AFTER another buyer has snatched them up!
Look At The Old Listings
Do not make the mistake of only looking at the newest homes to hit the market.
Homes that were overpriced when they first hit the market tend to be forgotten. Some times the only thing wrong with a home that has been on the market for a long time is the price.
Many buyers eliminate listings that are slightly above their budget. However, properties that are listed too high normally linger on the market for longer. This is why you need to watch the homes that are slightly above your budget but fit all your other needs and wants.
This does not mean you can make low ball offers and expect a miracle. Instead, put these homes on the back burner. After the home has sat for several months, the seller may be willing to accept the reality of what their home is really worth.
Widen Your Search
Maybe you can find a home by looking at homes that are not exactly what you want or need.
For example, maybe you need 4 bedrooms. It is possible there are homes with 3 bedrooms that have a room that could be used as a bedroom if you add a closet.
Or maybe you want 2 baths but a home has only 1 bath. It could be possible to add another bath and still not blow your home buying budget.
You may also need to consider homes in a location that isn’t exactly where you want. Often, you can find better prices in areas that are further off the beaten track.
I could go and on. Focusing only on finding a home that is perfect means you may eliminate homes that could be perfect with a little work.
The Take Away
You are like many home buyers if you are struggling to find a home in today’s tight real estate market. By following these simple tips, you could find a home despite the low inventory!