(NOTE FROM YOUR@HOME TEAM: This week we invited one of our long-time preferred lenders to share her views on this extremely hot real estate market we are experiencing. Leslie Vanderwerf, with Cross Country Mortgage, is a loan officer with over 25 years of experience in lending and teaching buyers about the best options available for their personal situation – whether a first-time buyer or a current homeowner making a change. Thanks, Leslie, and we hope you enjoy her outside perspective on the market!)
When it comes to buying a home, there aren’t really any shortcuts. And right now, it can take some time to get into a new home. Currently we are in a seller’s market and patience is the key to buying a home. The market is extremely competitive and buyers are getting creative to get their offers accepted.
There are four main steps to buying a home. They are:
- Get approved for your mortgage – especially now, that is essential to getting an offer accepted.
- Find a home – and more important – get your offer accepted! This may take weeks to months in the current market, so patience is key.
- Finalize your mortgage – getting your appraisal and any other outstanding conditions completed so you can close on your home.
- Closing on your home! This is the final day of the process and the day you will get the keys to your new home!
So why is it so difficult to find a home now? The housing market is still under supplied. Over the past decade, single family home construction is much lower than in the past. This graph shows the number of homes built in the US by decade:
The number of homes built in the last decade is much lower than needed. Even before the covid-19 pandemic, we were facing a shortage in the housing market. Freddie Mac estimates that we need to build almost four million homes to keep up with current demand. Builders are working to get us there but prices may be higher. Prices for lumber and other building materials is also increasing. In March 2021, there were 1.74 million housing starts in the US. This is the highest number in 14 years. According to Lawrence Yun, Chief Economist at NAR, “After 13 years of underproduction, this construction boom needs to last for at least three years to make up for the past shortfall.” Housing start to completion takes about 4 to 8 months, so be patient while new homes are being built. As buyers move into the new homes, it will help open up more existing homes.
The key to buying a home this year is truly patience. The timeline depends on how fast you can get an offer accepted. Some buyers are eliminating inspections and also guaranteeing appraisals -these are things we have not seen in the past. You need to work with your realtor and loan officer to get your best offer in front of the seller and in most cases, you only get one shot at it. Be prepared to write more than one offer and know that you are not the only one going through this!