Who knew that the residential real estate market would gain yardage during a raging pandemic? Home sales are up, and according to different industry surveys, home ownership is the goal line for lots of individuals and families. And it’s not the typical leaving the ridiculously expensive Oakland-San Francisco housing market for the no-sales-tax and bustling job market of Las Vegas/Henderson, new home of Raider Nation. (And knowing Raider fans like I do, proximity to Allegiant Stadium just might have been thee motivator.)
Being stuck at home all day, every day — working there, schooling the kiddos there, exercising there, eating there, relaxing there, keeping the marriage glued together amid dozens of half-finished home improvement projects there — gave many people the opportunity to figure out that maybe their living sitch wasn’t cutting it. And there’s no time like a viral epidemic time to prioritize.
Who is Winning? Buyers or Sellers?
Today’s COVID-19 market is what would be termed “a seller’s market,” meaning that there are a heckuva lot more buyers than sellers, who typically get the home filed advantage in these transactions. So, home buyers need to huddle up and strategize a very strong offense. Time to review the game plan. It could be a grudge match out there.
According to Fortune magazine, “New home sales jumped 43% in August compared with a year ago. In many markets, the sales were driven by demand for suburban properties by millennial and first-time buyers as work-from-home policies became the standard across many industries.”
Even with mortgage rates remaining low and millennials ready to purchase their first homes, the robust market won’t last. (Does it ever?). Because, you know what, mortgage lenders have tightened their purse strings. Compounding that is a scarce inventory driving up prices.
How to Beat the Odds
Home buyers can expect mortgage lenders to be a lot stingier and demanding with loan applications. And that’s for all loans, not only the conventional ones. Want the lowest interest rate available? Then make sure of the following:
· Ditch the debt. Pay down the credit card balances and don’t apply for new credit (other than the mortgage). Best to have your debt-to-income ratio less than 30%, meaning that 30% or less of your monthly income goes to debt payments. In 2020, the average debt-to-income ratio hovered at 35%.
· 20% or higher down payment. The 20% minimum isn’t a legal-FDIC-type-of-requirement. But look at your loan application like an online dating profile — which are you going to swipe past? The one with under 20%, at 20%, or more than 20%?
· 750 minimum credit score. Higher is better. Need to raise the score? Then keep on keeping on with timely payments, paying down the debt, and not applying for new credit. But you knew all that stuff, didn’t you?
Marching Down the Field
Time to turn off HGTV and get realistic about your new home wish list. Remember, inventory is scarce, and if you’re like most of us, I’m guessing your budget is too. You’ll gain more yardage by narrowing your wish list of must-haves. Rethink the open floor plans, she-sheds, man caves, entertainer’s kitchen, and panoramic views. Focus on your main reason for moving. (If being closer to Allegiant Stadium is your primary motivator, go ahead and keep the open floor plans, she-sheds, etc. Nevada is a unique market.) Also, perhaps now you are able to work remotely, thanks to COVID. That opens the location possibilities, ergo inventory of homes, as length of commute is less of a consideration.
Crossing the Goal Line
You got your financing and found the right home. How do you score with the right offer? The most sure-fire way to beat the competition is to offer more than the listing price and not play hardball with asking for repairs or concessions. I would advise against a Hail Mary Pass type of offer such as a Buyer Love Letter, which depends on emotionally appealing to the seller with heartstring pulls.
Making it simple for the seller is key to the offer. That means an attractive price, proof of financing in the form of a pre-approval letter, not asking for contingencies, and going along with closing dates and escrow lengths. Remember, in a seller’s market, there are many buyers in line waiting to make an offer.
Who knew that the residential real estate market would gain yardage during a raging pandemic? No one, that’s who. And no one can predict what the future will bring, though clues and indicators will let us guess. What we do know is that in today’s market home sales are up, interest rates are low, and inventory is scarce.
Is there a real estate- or relocation-related topic you would like to discuss in this blog? Let us know at info@raidersrelocators.com. We look forward to hearing from you.
