It’s an unprecedented set of circumstances that the world is in to consider buying a home. But, it still is very doable. Just expect to pay more than what you would have in recent pre-pandemic times.
House prices have soared in this new economic era as many homeowners are reluctant to move during a pandemic. This means the supply of homes has dropped this year.
Yet, remote work has taken off more than we ever would have thought. Therefore, many of us want to find more secluded areas to live in – which has rapidly increased demand for housing.
So before you make any commitments, here are five things you need to be aware of if you are buying a home this year.
The Supply and Demand Imbalance
Believe it or not, there are now more real estate agents registered now than there are homes on the market – according to The Wall Street Journal.
This shows there is very limited supply and a lot of demand for housing. It mimics a kind of gold rush mentality where people are jumping at the chance to make higher percentages on house sales by getting their real estate licenses.
Buyers have found themselves in bidding wars where prices have gone way over the expected selling prices of properties. And full upfront cash payments have been made by some buyers to secure their ideal homes.
Therefore, the best advice here is to think realistically about what you can afford in such a competitive housing market. Get rid of the mindset you once had pre-pandemic where property prices were much lower – it’s not the same anymore.
Of course, you could hold off buying and hope that prices will drop. But there’s also the possibility that house prices keep rising, maybe even for years.
So now, more than ever, choosing well-established, professional real estate agents with expert knowledge is crucial. They will know the market intimately and can help you in these testing times.
Mortgage Rates Remain Low
Part of why the demand for houses has risen so much is that mortgage rates have remained low, and loads of people want their dream work-at-home set-up. Yet, they are forecast to rise soon!
Being confined in a small city apartment close to work doesn’t appeal so much now, for obvious reasons. Many of us don’t need to commute so much or even at all anymore. And, the social aspect of living in a city right now has completely disintegrated.
However, even though mortgage rates have stayed pretty low, the houses are getting pricier. So be prepared to overpay for your home if you’re set on buying in 2021.
Plus, we should mention that you’ve got to incorporate closing costs and insurance into your house-buying budget.
Several Popular Regions Are More Expensive
A combination of pandemic and safety concerns in big cities such as LA has led to people flooding the buyers market in popular alternative regions.
We’re talking about places such as Texas, North Carolina, Florida, and Colorado, to name a few. Before, such regions were popular alternatives because they offered bang for your buck in many areas, along with a desirable lifestyle and great weather.
The heat is on in these new-founded popular places. Therefore, we suggest you try to think ahead of the trend and off the radar a little – you might find something decent in such an aggressive market.
Consider Building a Home
Depending on your expectations, buying some land and building your home could be the best idea you ever had. But, it could also be just as expensive as buying these days.
Since the pandemic, prices of building materials have spiked considerably because of logistics issues and manufacturing slowing down. So again, you have a supply and demand issue here.
That being said, if you choose your materials wisely and try to cut costs where possible, you could build a lovely-looking home that would have cost you a ton load money to buy in this current housing market.
Just take into account that building contractors will be in heavy demand right now, and there are only so many of them. If you have friends, family, or building skills yourself, you could also save a lot of money.
And we should mention, there is the popular trend of building a tiny house and even living off-grid as very viable options.
Get Your Research Nailed
This final thing to know in the current housing market is crucial. Since the market has changed considerably in the last year, it is vital you know what sort of prices houses in the area you’re interested in are selling for.
If you can, get a preapproved mortgage set-up, as this pretty much like you’re an all-cash buyer to any seller. And this can give you a decisive advantage over competitors.
Also, have a realistic budget in mind and have an emergency backup fund for unpredicted times where you might need to inject more cash into the deal.
Figure out what is your absolute want in a home – write it down. It could be an office to work remotely from. Then write your second criteria, and then third.
Once you know all your criteria, spend plenty of time researching all areas that interest you and others you never knew about. The best way to do this is to reach out to reputable experts.
Buying a Home in 2021
We have to say; this year is a real toughy! With high demand and meager supply, expect to pay out when buying a home.
If, however, you can make compromises on location and other desirable aspects you expect in your home, you might just find a home to settle with and grow to love.
Anyhow, thanks for stopping by! We wish you the best of luck and opportunities when looking for a home.