As mortgage rates continue declining, more buyers enter the real estate market. Unfortunately, there are lower housing inventories, making your home search more difficult than you expected. Does this mean buying a home during COVID-19 is impossible?
It doesn’t. It means making changes and expectations regarding the home buying process, though.
Here’s what to expect buying a home during the coronavirus pandemic.
Lower Inventories Mean Fewer Choices
Lower inventories mean you have fewer options. They call it a seller’s market because there are more active buyers than homes. If taking advantage of the low interest rates sparked your interest in buying a home, act fast. Before you look at homes, situate yourself financially.
What do we mean by this? Here are a few things you can do:
- Check your credit. Were you affected by COVID-19 financially? Furloughed employees, the unemployed, and the underemployed all took advantage of special payment arrangements during this trying time. Pull your credit and check that your creditors reported the information correctly. Everyone has free weekly access to their credit reports until Dec 31, 2020 – take advantage of it and dispute any errors.
- Situate your budget. Are you financially prepared for a mortgage payment? Create a budget and figure in your expected mortgage payment. How does it feel? Are you budgeting too much, should you cut back or is the payment just right? Know the amount you’re comfortable paying before looking at homes.
- Get pre-approved. Don’t wait until you find a house to secure financing. Many sellers and real estate agents won’t show you homes without the pre-approval letter. A pre-approval shows you can secure financing after clearing the specified conditions.
Now, when you look at homes, you’ll be ready to move fast.
Anticipate Bidding Wars
According to Fannie Mae, we should expect a 15% decline in housing inventories. That’s a big drop, especially during the heart of the home buying season. While COVID-19 slowed things down somewhat, many people still need and/or want to move.
With lower inventories, expect more competition. Organizing your finances is the first step. Next, you need a reputable real estate agent that has the same urgency you do. You want someone that will show you newly listed homes fast. The right agent will show you homes the way you’re comfortable seeing them (video, online live tour, or in-person) and help you make fast decisions.
If you get caught in a bidding war, don’t let your emotions take over. Remember the budget you set and abide by it. Let your real estate agent know the maximum payment you can afford. Your pre-approval letter will reflect it too.
Lower housing inventories sound scary but don’t let them create rash decisions. If the house you loved fell through, there will be others; it just may take more time than usual. Prepare yourself to act when the right home comes along, but don’t panic if it doesn’t work out.
