If you’ve yet to enter the housing market but are thinking of buying a home in 2018, there’s a lot you need to know.
As I once pointed out, this isn’t your older sibling’s housing market. Not just anyone can get a mortgage these days. You actually have to qualify. But we’ll get to that in a minute.
Let’s start by talking about home prices, which have soared in recent years.
1. Prepare for Sticker Shock
Yes, if you’re prepping to buy a home this year, expect to be shocked, and not in a good way. At this point in the cycle, home prices have eclipsed old all-time highs in many parts of the country.
And even if they haven’t yet, there’s a good chance you’ll be paying more than the Zestimate or Redfin Estimate for the property in question due to limited inventory and strong demand. In short, expect to shell out a lot of dough if you want a home in 2018.
2. Get Pre-Approved Early
Speaking of that home is out of your price range, you may want to get pre-approved with a bank or mortgage lender ASAP. First off, real estate agents won’t give you the time of day without one.
And secondly, if you don’t know how much house you can afford, you’re basically wasting your time by perusing listings and going to open houses. This is especially true if the homes you’ve got your eye on are consistently going above asking.
It’s not hard or all that time consuming to get a mortgage pre-approval, and it’ll give you more confidence and perhaps make you more serious about finally making the move.
3. Check Your Credit Scores and Put Away Your Credit Cards
While you’re at it, you should check your credit scores (all 3 of them) and determine if anything needs to be addressed. As I always say, credit scoring changes can take time, so give yourself plenty of it. Don’t wait until the last minute.
And as you’re addressing anything that needs more attention, do yourself a favor and put the credit cards in the freezer (or somewhere else out of reach). Lots of spending, even if you pay it back, can ding your scores, even if just momentarily. Bad timing can create big headaches.
Additionally, pumping the brakes on spending might give you a nice buffer for closing costs, down payment funds, moving costs, and renovation expenses once you do buy.
4. Inventory Will Be…Limited
It’s the same story in 2018 as it was in 2017, 2016, and heck, even as far back as 2012. There’s really been a lack of inventory since the market bottomed because homes were never for sale en masse.
Borrowers got foreclosed on or deployed real estate short sales to move on, and banks made sure inventory never flooded the market.
Now we’ve got would-be sellers with nowhere to go, thanks to the massive price increases realized in the past few years. It’s hard to move up or downsize, so a lot of folks are staying put. That means less choice for you.
5. It Might Be a Fixer
You probably don’t have the same skill set as Joanna and Chip Gaines, but you might still wind up with a fixer-upper thanks to those inventory constraints. And that’s okay.
What I’ve learned from buying real estate is that you’re typically never going to be content with the upgrades previous owners or developers make anyway. So why pay for it?
There’s a good chance you’ll want to make the home yours, with special touches and changes that distancing yourself from the previous owner. Don’t be afraid to go down that road, but also know the difference between blemishes and design challenges, and major problems.
6. You’re Probably Going to Have to Fight for It
What’s even more annoying is that you’re probably going to have to fight to get your hands on the few properties that are out there, depending on the housing market.
In popular metros, bidding wars will again be the norm, and there will always be someone willing to outbid you for that home they just must have.