Thinking of buying or selling a home this spring?
A lot of home buyers have been hoping that last year's crazy housing market might finally slow down, giving them a better chance of winning their dream home.
Unfortunately, many real estate agents report that rising mortgage rates mean the rush for homes is heating up again, and they say that spring of 2022 will be just as competitive as last year.
Rising rates heating up the market
Denise and Steven Taylor are realtors watching the market go into overdrive for a second straight year.
They say it took a bit of a breather over Christmas, but with the Fed signaling that rate hikes are likely coming this spring, buyers are now worried about being priced out.
"Buyers are getting frantic right now," Steven Taylor said. "They are starting to look more aggressively for homes because of the fear of interest rates going up."
That is already happening all over the country.
Thirty-year mortgage rates nationwide are up from 2.5% in late 2020 to close to 4% for the first time in three years. That can add over $200 to the average monthly payment.
Surging rates have left buyers like Tim and Rachel Duris, clients of the Taylors, feeling a sense of sudden urgency, having lost out on several homes the past few months.
"There was one home that we were interested in putting an offer in on, and we were going to wait until the next morning, but by the time I texted Denise, it was gone," Rachel Duris said.
The Taylors say some buyers are considering waiting another year, hoping that more homes will show up on the market causing prices to fall.
But most realtors say that is unlikely, short of a major recession.
"The prices are still going up," Denise Taylor said. "They are definitely not going to be less next year."
What home buyers can do
So how can buyers win in the hot market?
The Taylors suggest:
- Getting pre-approved and locking in a rate for 30 to 90 days.
- Making an offer on the spot when finding a good home. Buyers may even have to make an offer based on a virtual online tour without even setting foot in the home.
- Considering the listing price to be just a starting point. They say buyers should make sure they are pre-approved for over the list price.
"We tell them to look at the listing price as a starting price," Denise Taylor said. "It will start there and more than likely go $10,000, $20,000, or more over asking price."
Finally, if a buyer's offer is solid and they want the home, the Taylors recommend putting in what is called an "escalation clause," meaning the offer can go up if someone else puts in a higher bid.
It sounds incredibly frustrating and depressing for those hoping to find a new home this spring. But there is good news about Rachel and Tim and their little girl: They just had their offer accepted on a home that they bid on as soon as it was listed.
Their message is to move quickly and not wait to make an offer, so you don't waste your money.
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