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Our Economists Top Tips For Buying A Home In 2016
There’s a lot of tried-and-true advice out there for would-be home buyers (including our own). But the housing market is changing all the time, and if you’re on the hunt for a home, you need to stay aware of the latest trends—and how they’ll hit you where you live (literally).
In order to help buyers land their dream home in 2016, the realtor.com® economic data team has done its homework on the stats that matter to come up with a short list of its best advice.
“Buyers looking to close this year need to keep an open mind and be prepared to move quickly when they find a home that meets their needs,” says Jonathan Smoke, our chief economist, citing “fierce competition among buyers.”
Start your search early
The No. 1 tip that his team came up with, Smoke says, is to kick off your home search early.
“If you’re intending to purchase, based on the volume of house hunters who are just like you, consider doing it sooner rather than later—you’re likely to get a better price and a better mortgage rate,” he says, pointing out that there’s far more inventory available relative to the number of sales in the off-peak months.
More than 85% of buyers who plan to purchase in the next year intend to buy in the spring or summer of 2016, according to the most recent realtor.com survey. With roughly 50% more listings inventory relative to the number of potential home sales expected in January and February, buyers who start their search early face less competition with nearly the same number of homes.
Comparison shop for mortgages
“Work as hard on the mortgage as you do on finding a home—this will pay dividends over the life of the mortgage that you have,” Smoke says. “Don’t just assume that the 30-year fixed mortgage is the best for you.”
Mortgage rates are expected to reach 4.65% by the end of the year (while prices are predicted to rise 3% year over year), but many consumers aren’t aware of the variety in mortgage products that can affect what they pay, Smoke says.
A lower interest rate can make the difference in qualifying for a loan to buy a certain home—not to mention saving you thousands over the life of the loan. So make sure to shop around!
Consider a new home
If there’s anything that can ease the current housing crunch, it’s new construction. But many people just rule out the option, Smoke says.
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“You either know about new homes or you don’t know about new homes,” he says. “The vast majority of people don’t, and they make the assumption that they’re not right for them because they’re too expensive, et cetera.”
Just keep an open mind, Smoke advises. After all, the number of new homes on the market is expected to grow more rapidly in 2016, resulting in a 16% increase in new-home sales year over year. But the lack of awareness about new homes means you’re likely to encounter less competition.
While new homes are typically more expensive, they also come with warranties on the structure and appliances—so you’re not likely to get stuck with any hefty repair bills for the first few years.
Picture yourself in the Midwest or the South
The biggest issue expected to hold buyers back this year is an inability to find a home in their price range. Buyers in the Midwest and South have an advantage there.
Of course, relocating depends on many factors, the most important being the availability of jobs in your field and a network of friends and/or family, but if you’re living from paycheck to paycheck in California, it’s worth checking out your options.