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3 Trends Home Buyers Should Watch For This Summer
Buying a home is a major life decision, so it’s essential to make sure the time is right. The most important thing to consider when making that choice is your own financial situation. That includes whether you have:
• A solid credit score
• Good proof of income
• A hefty down payment
However, it can also be smart to pay attention to trends in the housing market. So if you’re thinking this summer looks like a good time to buy a home, there are three major trends that you should be on the alert for.
1. HOUSING INVENTORY IS LIKELY TO PICK UP
Last year, due to the pandemic, there was a significant slowdown in homes listed. But there are some promising signs that things are changing. In April of 2021, for example, 32.6% more homes were listed compared with April 2020 during the start of the pandemic.
And conditions have rapidly improved in the United States since then. Both state and federal governments in the U.S. have now taken substantial steps towards loosening coronavirus-related restrictions. And a growing share of Americans have been fully vaccinated.
The end of lockdowns and the hope of a new era free of virus risk could lead to both a strong economic recovery and an eagerness to return to normal life. And that’s likely to translate to more people deciding to list their homes so they can take advantage of a competitive housing market.
2. HOME PRICES WILL REMAIN COMPETITIVE
Although more inventory could theoretically help bring prices down to more manageable levels, the fact is that there’s a lot of pent-up demand for properties. And when sellers list their homes, they usually need to buy new ones of their own. That means demand doesn’t always drop as much as you might think when new listings flood the market. Unfortunately, it’s likely that prices will stay relatively high for the coming months, even if more homes do come on the market. That’s especially true since shortages in materials and COVID-related supply issues have made it difficult and expensive for brand new houses to be built.
In fact, data from Redfin has recently revealed that an estimated half of all homes are now selling for above their asking price. That’s a 23 percentage point increase in the number of homes selling for above list price, and it’s a major reason why home prices overall have gone up 24% compared with a year prior. And this trend is expected to continue.
Buyers may find it difficult to find affordable homes as median prices reach record highs, and it’s likely that multiple offer situations will continue occurring on properties in many markets throughout the United States. In this seller’s market it’s crucial for buyers to keep a cool head when looking for homes. Make sure you know how much house you can afford. And avoid getting caught in a bidding war that leads to you going above your spending limit. By researching property values in your area, setting a hard spending limit based on your budget, keeping an open mind, and remembering there’s always another house, you can hopefully avoid overpaying for a property in this competitive market.
3. MORTGAGE PRICES ARE STILL TRENDING NEAR RECORD LOWS
There is some good news for would-be homeowners, though: Current mortgage rates remain relatively competitive. Rates are well above the record lows that we saw during the heart of the pandemic. But that doesn’t mean that rates aren’t still very low by historic averages. In fact, the average interest rate on a 30-year fixed-rate loan was 3.133% on May 28, 2021. By comparison, in 2019, the annual average rate of 3.9% was described as one of the lowest in the past five decades.
It can take time to shop around for the lowest possible rate, so it pays to start looking for a mortgage loan ASAP. As mentioned above, you’ll want to get pre-approved early in the process, and it’s important to compare quotes from at least three lenders before you commit to borrowing from one.
Once you’ve been approved, you may want to consider locking in your rate in case interest rates continue trending upward. A mortgage rate lock means lenders will allow you to borrow at the promised rate, even if interest costs climb before your loan closes. Often, lenders allow you to do this for free, although sometimes there’s a small fee. Since rates are very low right now and likely will stay very competitive, it remains a good time to borrow to buy --- provided you can find the right home to buy at the right price.
A HISTORIC OPPORTUNITY TO POTENTIALLY SAVE THOUSANDS ON YOUR MORTGAGE
Chances are, interest rates won’t stay put at multi-decade lows for much longer. That’s why taking action today is crucial, whether you’re wanting to refinance and cut your mortgage payment or you’re ready to pull the trigger on a new home purchase.
Source: www.fool.com. Article written by Christy Bieber. Christy Bieber is a personal finance and legal writer with more than a decade of experience. Her work has been, featured on major outlets including MSN Money, CNBC, and USA Today.
Now’s a great time to talk to an Orlando Credit Union mortgage loan officer to get answers to your questions or to get pre-approved. Also, learn more about our mortgages and free home buyer's guide