Did you know that the cost of a typical mortgage in the US has hit its highest since the 2008 financial crisis? The average interest rate on a 30-year mortgage hit 6.02% this week, more than double what it was a year ago. What does this mean for you? If you’re planning on purchasing a house in the US soon, you might have to pay a lot more than you were expecting. This is the first time in a year rates have gone up for this length of time and is a sign that people are concerned about an overheating economy.
It’s important to remember that the US central bank has been aggressively raising interest rates to reduce the pressures driving inflation across the economy. The Fed has forecasted an average of 3 rate hikes per year over the next two years, so this may be just one of many hikes we see. If you are still ambitious about buying a house under such circumstances don’t forget a Home Inspection Virginia to safeguard your investment.
The rise in Income vs. Rising Home Prices
We all know about the constantly increasing cost of living and how expensive homes have become. But you may not know that living costs are actually getting farther and farther out of reach.
According to the Federal Reserve, while median household income has increased by 6% since 2000, housing costs have skyrocketed by 31%. That means that a family today needs to work nearly two months (or 100 hours) more each year just to cover their housing costs.
Meanwhile, an increasing number of Americans spend 30% or more of their income on rent or mortgage payments. This has created a rapidly spiraling crisis, as affordability issues, once a financial concern for the lower-middle class, have shifted to the upper-income brackets. This is a huge problem in the US, where many Americans are now struggling just to keep themselves housed. The median US home price is now 25 times higher than its median income, with millions of people unable to afford homes.
Is It A Buyers or Sellers Market In Virginia Right Now?
It’s a seller’s market out there, and the market is thriving! One of the reasons for this is that there simply aren’t enough homes on the market to meet demand. In a seller’s market, homes tend to sell faster and for more money than in a buyer’s market.
Also, during a seller’s market, sellers are typically not very flexible with their prices as they know they can find another buyer to buy their home quickly. Many people even make the grave mistake of skipping a Virginia home inspection in an attempt to outdo their competitors. Not having an inspection is similar to buying a car without taking it for a test drive and trust me you don’t want to go down that road when spending thousands of dollars for a once-in-a-lifetime move.
On the other hand, home sales have seen a sharp decline due to a low inventory and more buyers. Sellers seemed to be shying away because of the inflated prices and high mortgage rates. In August, the median price was up 4.7% from last year; on average, homes sold were down 20.4%. Eleven thousand six hundred seven homes were sold this month, a decrease of 14579 from last year.
6 Vital Tips for Buying A House in a Seller’s Market
Housing prices are at an all-time high, and finding a place to call your own can be hard. That’s why we’ve compiled some helpful tips to navigate the tricky market and get you into your dream house!
In a seller’s market, properties sell quickly and often at prices above the asking price. If you find an affordable property listing, it can be tempting to make an offer immediately, but if you’re not prepared for negotiations, it can cost you time and money in the long run.
Have Your Paperwork Ready
Suppose you think you have found the perfect property. You’ll want to make sure that when you submit an offer on a property, you’ll want to include your pre-approval paperwork with the offer – this is so you can show the sellers that you are prepared and are serious about the house. Anybody can get services of Certified Home Inspection in Virginia. A seller may take your offer just because you have your paperwork done, and he can close the deal without wasting much time.
Appear Flexible To The Seller
Be very flexible when it comes to your availability, so it doesn’t matter what time of day you will be available for the seller to see the house. A few extra days for the seller to move their things out shouldn’t be an issue. Making the seller comfortable is just one step closer to buying your dream house.
Avoid Added Requests
Can you please share with me photos of the washer and dryer? I’m also wondering if you can lower the price because the condition of the bathrooms is not so good. Avoid such requests and questions because the seller may have someone with an offer ready to pay full price for the house with all the appliances in the condition they are. Instead, have an inspection contingency and have your home inspector in Virginia inspect the house and address any concerns you may have. You do not want to ask for anything that may give your competitor a greater chance over you to buy the house but then again you don’t want to end up being stuck with a lemon.
Earnest Money Deposit
Consider setting aside the amount for the earnest money deposit. Earnest money is a small amount of cash the buyer provides that gets held in escrow until the sale is complete. There’s no minimum, but it usually varies from 1% to 5%. Statistics show these rising home prices in Virginia over the past year. By providing earnest money, the buyer assures the seller that they are serious about purchasing this property.
Contact A Listing Agent
You might be more competitive with your offer if there are a lot of other buyers for the same property. You can contact the listing agent and ask them how many other buyers they have. This allows you to make a sensible offer that is neither a lowball offer nor way too high.
Prioritize Home Buying
If you need a house urgently, set it as a top priority. Be available at the seller’s convenience and show up on time. Look around for as many homes that fit your budget and requirements so you can inquire about the best ones on time and buy the one most suited for you.