Home Buying Tips During a Tough Real Estate Market – LX
Everything you need to know to close a deal in the housing market despite rising interest rates and inflation.
Over the past two years, finding sustainable and affordable housing has been an arduous process.
As interest rates and inflation rise in 2022, buyers are losing purchasing power.
In fact, housing demand is at its lowest level since 2000, according to the Mortgage Bankers Association.
A few years ago, buyers worried about beating the competition as low interest rates led to high demand for homes. Now buyers are worried about finding a better deal in the future.
Either way, buyers and sellers are stressed and hopeful that the housing market can deliver big improvements.
What is the current state of the real estate sector?
Over the past two years, there has been an increase in inventory, which means buyers have more choice when choosing a home.
The increase gives buyers a greater chance of landing a home they’re interested in while creating less competition.
If you plan to keep your home for at least three years, you’ll still make a profit, Texas real estate agent Matt Templeton told LX News.
The rental market has also been tough with rents up 20% year-on-year, according to Templeton, and a housing shortage across the country. “If we thought the market to buy was going crazy, the market to rent has gone crazy and a lot of people are experiencing it,” he said.
What is a good strategy for buying a house these days?
Knowing what type of micromarket you are looking for a home in is an important part of the process.
In high-demand areas, many offers can be made, causing homes to sell quickly for well above the asking price. In an area with higher supply, houses may be sold for much less than the full price.
According to Templeton, it’s important to look for homes that have been on the market for at least 15 days.
“The longer they’ve been on the market, the more likely it is that … other buyers will ignore them,” Templeton said.
Another recommendation offered by Templeton is to buy a house that is less aesthetically appealing, but does not require a lot of major work.
“A lot of times these homes are selling below market and they’re an opportunity for you to get in some equity,” Templeton said.
What future for real estate?
Many of the problems buyers and sellers face don’t stem from a shortage of land, but from the inability to build fast enough, Templeton said.
“We have labor shortages, we have labor supply and material shortages…so I think finding new ways to build and new types of housing…will solve this problem.”
Accessory Dwelling Units (ADUs) are one of the solutions recommended by Templeton. ADU basically builds a house behind your house that can provide rental units.
“You will have a mixed income where maybe someone who rents at a lower price lives in the back and someone who rents at a higher price lives in the front and you get a more mixed community,” said said Templeton.
Another solution is 3D printing, which decreases construction time thanks to the efficiency of the machine. The large machine extrudes concrete in layers that form the walls and foundations of the house.
Finally, Templeton cites the importance of roommates when it comes to saving money. Having someone to share your home cuts down on expenses considerably.