After a record-breaking year, the housing market is still scorching hot, with the average home sale prices up more than 20 percent across the country. While many homeowners have chosen to sell their homes, new data from Opendoor shows that 38 percent of people who are looking to buy a home in the next year say they've paused their search. The top reasons why? Thirty-five percent say the market is too intimidating, while 22 percent say they've already lost out on too many homes.
Many of my friends and real estate clients have experienced the reality of the tough market first hand. While homes are selling fast and for over the listed amount, I hate to see people lose hope. Don't let the tough market discourage you from your dreams! Homeownership is still possible, it may just call for extra patience and flexibility.
Understand What You Can Afford
The best place to start with your home search is to get realistic with financing, so get pre-approved for a home loan and set a budget. While it's tempting to look at homes outside of your price range, don't do it. Set filters on your favorite real estate apps or establish clear parameters with your realtor. By sticking with what you can comfortably afford, you'll be able to avoid feeling disappointed later on.
Embrace the Unexpected
Though you may have visions of a certain home style or neighborhood in mind already, you'll find a world of possibilities when shopping for homes. You may even find something unexpected you like! Be open to visiting a range of homes, whether it's homes that come in under budget and need manageable repairs, or move-in ready homes in a different neighborhood than you originally planned. Eventually, you'll find a home that's right for you.
Feeling unsure? A good rule of thumb is to consider whether a home you're looking at is somewhere you would enjoy living in as much, if not more than, your current home. If the answer is yes, making an offer may be the right decision.
Don't Rule Out Properties That Need TLC
Buying a fixer-upper isn't for everyone, but if you're open to completing a renovation, investing in a home that needs significant repairs can be a smart path to ownership in a hot housing market.
Like the 57 percent of people who would consider buying a fixer-upper to stay on budget, my husband and I saw a huge opportunity when we found our current home in Los Angeles. After months of searching at the top of our budget, we knew the property was in a highly desirable location. Even more, we saw that undergoing a renovation could also serve as an opportunity for us to design a home that would perfectly suit our growing family and evolving lifestyle.
When evaluating a fixer-upper, consider the home's selling price and figure out the leftover budget you'll have for making upgrades. Certain updates, such as remodeling a bathroom or adding a second bedroom, can also add significant value to a property.
Inexpensive DIY Projects Can Transform a Home
If you're more concerned about a home's appearance and making cosmetic, rather than structural, changes, there are countless inexpensive upgrades that can totally transform a home's appearance to align with your personal tastes.
A fresh coat of paint and accent walls can make a major difference, along with small, impactful upgrades like changing kitchen or bathroom hardware. You can get creative with wallpaper in bedrooms, marble contact paper on countertops, replanting a garden, and so much more.
Consider Alternative Financing Options
One in five first-time home buyers today is a single woman. One of the most daunting and stressful parts of buying a home is coming up with a downpayment, especially with a single source of income. Opendoor found that 27 percent of Millennials and 18 percent of Gen X say they'll need to ask for financial help. Even more, 22 percent of Millennials and 18 percent of Gen X say they'll need to live with friends or family to save enough cash.
If you're feeling overwhelmed about saving enough for a downpayment, think about non-traditional financing options before putting your home search fully on hold. Some first-time buyers are able to get help from family and friends, while others choose to withdraw money from investments earlier than planned.
Look Into Using a Cash-Backed Offers Program
In this market, cash seems to be king. In fact, 25 percent of offers are all-cash, up from 15 percent just a year ago. Opendoor's recent survey found that 75 percent of sellers say a financed offer would need to be about 10 percent higher than a cash offer—if your dream home is $500,000 and you didn't make an all-cash offer, you'd likely need to increase your bid by $50,000 to be competitive today.
This issue is that most people don't have enough cash on hand to make an all-cash offer. Luckily, there are some companies that can help. Depending on where you'd like to live, you may have access to a cash-backed offers program. With cash-backed offers, a company will help you make a contingency-free, all-cash offer, empowering you to stand out to a seller. Buying with cash also gives you more flexibility with your closing timeline, which means you won't have to worry about losing out on a home you really love.
Getting prequalified for a cash-backed offers program is quick and only calls for a letter from your lender. Some companies can also help buyers get pre-qualified without impacting their credit, saving you additional time and stress during the home buying process.
It's important to understand market conditions and be prepared, whether you're shopping for your first home or your 10th. A competitive market can mean losing out on a few offers, but don't let it get you down. Be patient, stay focused on your goal, and use the losses as a learning experience to strengthen your next offer. Once you win a home, you'll be proud to be a homeowner.
Are you currently house hunting? Tweet us @BritandCo and tell us about your experience!
Featured images via Alison Ives/@colourwars
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