Posted by Berkshire Hathaway Homeservices Florida Realty
Does it seem like you’re never going to find a home to buy? You’re not alone. More than half of potential buyers report big problems finding a home because of too much competition in a market with low inventory. But don’t give up just yet.
Remember back when the real estate bubble burst? No one knew exactly how far home prices would drop, so no one wanted to buy the millions of existing homes that were accumulating for sale. Banks stopped lending money to build. And builders put the brakes on new construction.
Eventually home prices dropped low enough to motivate investors who began buying homes to either flip or hold as rental properties. That was good news because banks and other sellers liked the clean quick cash deals. In fact, investors helped jumpstart the housing recovery, which helped save our home values from falling even further.
Today though, much of the existing housing inventory has been purchased, so it’s become tough for average buyers — people who simply want a home they can live in — to compete.
If you’re a first-time buyer, you’re having the toughest time because you usually have less cash and need to jump through more hoops to get credit (such as meeting FHA requirements).
FACT: First-time homebuyers account for only 28% of all sales today, down from 39% last year and 40% before the recession.
More than a third of buyers have been in the market for a year or more. Those who do manage to find a home often have to make uncomfortable compromises to close the deal, such as agreeing to an “as is” purchase or closing sooner or later than they’d like.
If you’re renting, you’re facing low inventory, too, because builders stopped building when the bubble burst. Now you have fewer apartments to choose from while rents continue to rise. Even if you’re not in the market to buy or rent, prolonged low inventory can artificially drive home prices up, risking another bubble, which puts all of us at risk.
TIPS TO HELP YOU FIND A HOME IN A LOW-INVENTORY MARKET
The good news is your luck may be changing. Investor home purchases are down to under 20% — when recently they were as much as 30%.
As short sales and foreclosures retreat from America’s real estate scene, investors are losing interest. A recent survey reveals about half of investors plan to curtail their home purchases this year.
So don’t give up on finding that home just yet. Instead follow these these tips to help you outwit the remaining investors and find a home sooner rather than later:
- Follow the inventory. Inventory rates vary by location, property type and price range. You’ll have more to choose from, and probably get more bang for your buck if you can go where the inventory numbers are higher.
- Look for homes investors avoid. Investors tend to steer clear of homes that need a lot of work or homes in areas that don’t allow investors or rentals, such as gated communities. Some of these communities let investors get away with renting when the market was hurting, but they’re cracking down now.
- Don’t forget expired and withdrawn listings. Many potential sellers listed their home for more than they were worth last year. But home values are up now, so what they’re asking may be appropriate. Investors don’t put in the time to find these listings.
On a final note, remember there are clear seasonal patterns for housing inventory. Now that the summer buying season is over, competition tends to loosen up. Good Luck! Click on video to learn more!