Whether you're expecting your first child, had a big promotion, have an investment that finally paid off, or you're just simply tired of renting - You are now finally ready to make your very first home purchase!
The issue is - you are buying a home NOW , in the latter part of 2022! Mortgage rates went up at roughly 2.7% since the start of the year. House prices haven't bulged a bit, and the competition is still as hot as it was all year round.
In spite of that, you still want to find a way around this - and that's a good thing! Let us give you some important tips and information on how to get started.
Preparing for the current market availability
Although house supply will improve for three months starting in June, the 10.8% increase will not be adequate for you to keep up with the competition. Also, you would have 3 months at least for these specific homes to sell based on our current sales pace. It might not be a lot, but you have more choices coming in compared to the first 2 quarters this year.
The usual house supply would usually take around 5 to 6 months, so having a shorter lifespan means houses won't be around very long. We strongly advise you to get an expert to help you leverage your way in your first home or property.
High home prices and even higher mortgage rates
Housing mortgage rates definitely have gone up this year. It's roughly expected to stay at their current range during this second half of 2022 according to The Federal National Mortgage Association, Federal Home Loan Mortgage Association, and The Mortgage Bankers Association .
This definitely does not help as home prices still continue to increase on a year-to-year basis as we have set the median price for sold homes at $406,600 this second quarter alone and is increasing by 14% year over year according to The National Association of Realtors.
However, they also predicted that the median price of existing homes would decline to $402k in the third quarter and up to around $380k in the fourth. In the fall, prices typically decline from the typical spring and summer home buying.
So the verdict is in - According to the NAR's recent economic outlook, prices will still be higher on a year-to-year basis, but the pace of those price increases will moderate to 11.7% in the third quarter and 6.5% in the fourth compared to the usual 14%.
Homebuying competition has calmed down a bit, but is still ongoing
Compared to the "buy anything" mentality that most people had two years ago, people have been more in favor of modernized, move-in ready homes and are steering away from properties that would require them to put in work.
At the start of the year , homebuyers would need to accept the fact that not all offers would go through - in fact, only around 10% of those offers have the chance to push things through seriously.
But as the year slowly closes, your chances of moving past the offer stage has increased to around 100%-500% , which gives you at most 50% of all offers given to be taken seriously.
Don't get too comfortable though - inventory is still not enough, and the rising interest rates gives other buyers more competition in the market.
Now that we've given you information on what's going through the market, here are our recommendations:
Getting someone to help you get started
Buying your first home definitely invites a lot of stress that could have been prevented early on! Most first-time home buyers do not consult experts or even people that they know that has experience in buying a home, which resulted with a couple of setbacks with loan application, bidding, and even determining what kind of home would they want.
Our article regarding our First-Time Home Buyers would definitely save you a lot of time and hassle as it gives you the fundamentals of finding a house (like getting pre-approvals, preparing your preferred house features, getting represented, etc.).
In doing so, you are getting your foot at the door of home buying the right way.
NEVER wait for the right time to buy a house - particularly now
There is no sign of prices stopping - even if we're getting a reduction on the projected increases per quarter, that does not remove the fact that prices are still increasing. The best time is always as soon as you can.
However, that is just the tip of the iceberg - make sure that if you are buying now, don't skip our first advice and have a trusted and experienced realtor, if not an expert, help you along the way.
Don't wait for your affordability - work your home's value instead
We cannot emphasize enough how unproductive saving up money to purchase your dream home is compared to taking advantage of a decent offer on a home that suits your needs right away.
Aside from the house prices going up and the mortgage rates increasing, the value of your money decreases due to the ongoing inflation as well. With a couple of good deals, you can basically "flip" your way to your dream house eventually - all you need is knowledge and an expert to help you out!
Don't work for your property - make your property work for you. Don't waste your time making more money to get what you desire when you have other means of doing it.
Our last parting advice is to NEVER do it alone. Partner yourself with a realtor that knows how to determine the house that you want, with the price that matches your spending power and knows how to navigate through the market to net you top dollar - every time!