The residential real estate market is set to hit it’s best year since 2006, according to Realtor.com. But have no fear. This is the real deal and not a bubble. The increase is due to strong job growth across the country. Over one million jobs have been created for the 25 to 34 demographic, the typical age of first time home buyers. Realtor.com is seeing record traffic as people research all aspects of this important decision. Homes are selling quickly with the inventory of homes nationwide just 66 days, which is 8 days faster than last year.
Rents are increasing as well, sometimes making it cheaper to buy than to rent. With mortgage rates rising, people are purchasing houses at record levels, with new home sales up 26% over last year and pending home sales, new contacts on existing homes, up 14%. For more information on these statistics, please click here.
If you are thinking of taking the plunge, decide whether it is financially smart for you to purchase. Generally, you should determine if you can rent a similar house or condo for less than it would cost to buy. Consider the cost of your mortgage, maintenance, and property taxes. For a calculator to help you decide, click here.
Costs can differ significantly between neighborhoods in the same geographic area. For instance, two adjacent counties may have property taxes that differ by thousands of dollars. One block may make all the difference between an award winning school, and a school with an unacceptable reputation. Details are crucial in making the correct decision.
Choose a realtor with extensive experience in the area you are interested in. If your realtor lives in the area, even better. A knowledgeable realtor will be able to guide you towards properties that are an especially good deal while giving you tips that only an insider knows. To determine how much you can spend, meet with a mortgage banker to discuss your options. Using a mortgage professional your realtor has worked with before can sometimes make the process easier. There will be extra costs like moving, inspectors, closing costs and possibly extra money needed for essential repairs if the contract is “as is.” Don’t forget to include the cost of property taxes, insurance and mortgage insurance in your calculations.
When you know how much you can spend, the fun begins. Explore homes for sale online and then let your realtor know which ones you’d like to see. Once your realtor sees what homes you are targeting, he or she will be able to suggest homes that are similar. When you have found “the one,” your realtor will help you determine your first bid based on comparable properties in the neighborhood that have recently closed. Remember that with a hot real estate market like this, trying to low-ball your first bid comes with significant risks of losing the property. Once your bid is accepted, have an inspector check the house for problems.
We will publish Part 2 with more tips for the novice home buyer next month. If you just can’t wait, check out this article.