The recession that plagued the housing market is fast receding and home prices and values are not just resurfacing. They are shooting up.
The Standard & Poor’s/Case-Shiller 20-city home price index jumped 12.4 percent in March compared to the year-ago period. In several markets across the country prices are well above the 2007-2008 levels, according to RealtyTrac. Suddenly, the market is a seller’s paradise.
While many potential first-time buyers are struggling with loan approvals and overpriced yet sparse inventory, the situation is quite different for existing homeowners. They are reaping the benefits of growing equity on their homes.
So, is now a good time to invest in that move-up home before affordability becomes an issue?
“Things are balancing out with inventory increasing and interest rates still low,” says Leslie Piper, a Realtor and consumer-housing specialist with Realtor.com. “Rates won’t stay low forever so it’s a smart time to consider taking the leap and moving into a larger home while locking into a great rate.”
Yet others say that the market is still very complicated and it’s best to tread with caution. Daren Blomquist, vice president of RealtyTrac, says it’s going to be a tricky dance for homeowners looking to move up.
“The positive is it’s a great time to sell,” he says. “[Owners] probably hold a lot of equity on their current homes and will be able to sell quickly.”
But, the problem would be finding the new, bigger home at an affordable price. Here are a few tips for buyers looking to move into a bigger home.
Sell Now, Buy Later
Summer is the busiest season for the housing industry. With inventory levels still low, Blomquist says it’s a good time to sell and reap a good price. But, this may not be a good time to buy because the market is fiercely competitive. “I think a good strategy would be to sell now and possibly wait until the fall or winter to buy when it becomes a buyer’s market,” he says.
Do Your Homework
Find a trusted Realtor. Consult friends and family and interview a few agents before finding someone you are comfortable with. Map school districts and places that have open houses on Sundays, Piper says. Get access to apps that will help you with the buying process (think calculating mortgages and listing updates).
“Having the pulse of the market is very important,” Piper says.
Be ready to make four or five offers before you land a home, Blomquist says. Don’t offer more than what the property is worth or what you can actually afford. Budget your expenses well and make a wish list, Piper adds. Make sure you have enough money left after your mortgage payment to buy furniture and pay your utilities.
Be Creative in Your Search
Besides hiring a Realtor and looking at the usual places, expand your search to the social media. Look for properties that other buyers may not be interested in or know about. “As many as 30 percent pocket listings are not listed with agents,” Blomquist says. “You need to tap into those places.”
Don’t Be Too Picky
Look at foreclosures and distressed properties. Many of those homes are not listed for sale but are likely to hit the market in the near future.
Get financing in order
The market is filled with cash buyers, and they are fiercely competitive. It’s more important than ever to have a prequalified mortgage before you start shopping. Look for a property that’s priced less than what you can afford, which will help if there are multiple bids, Blomquist says.