Home Buying Hassles: Low Inventory, Bidding Wars, & More
If you are shopping for a new home this year, there are some things you should know before putting in an offer. 2017 is shaping up to be one of the fastest growing housing markets on record with high demand, low inventory, and even potential bidding wars pushing prices ever higher. Here are some potential issues to be aware of as you begin your search.
Homes are flying off the market this year with demand continuing to rise and supply dwindling. According to a new report from Redfin, home sales jumped nearly 9% this spring, while the number of homes for sale plunged 13%. This low inventory is leading to higher prices in some markets and increased competition as well as increased median housing prices. This combination may make it more difficult for first-time home buyers to find a home they can afford. The very tight supply of homes in markets across the U.S. is leading to more bidding wars over homes for sale. According to the National Association of Realtors, 1/3 of all properties sold this March sold for at or above asking price. Make sure you hire an experienced real estate agent who knows your local market and can help you guide you through any multiple offer issues that may arise.
Other strategies may include getting a pre-approval letter from your lender, limiting contingencies in your offer, and being flexible on the closing date. Mortgage rates for conventional loans rose almost 1/4 of a percentage point following the 2016 presidential election. The Mortgage Bankers Association predicts that rates will reach 4.6% by the end of 2017. Rates tend to rise with increased home demand, and those higher rates suppress the demand as a disincentive for homeowners to purchase a new home. The good news is that it is easier to get a mortgage now than any time in the past eight years because of an increased availability of low-down-payment loans, jumbo loans, and banks making up for a decline in refinancing business with higher mortgage rates.
If you are buying a new home, it is a must to review your insurance policies to make sure you are adequately protected. Safeguard your most valuable asset with AAA Deluxe Home Protection, which offers options for home warranties, home security, flood insurance, and disaster mortgage insurance. Call one of our expert insurance agents at 1-866-315-1252 or visit us online to find your local AAA insurance agent.