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Thinking about buying a home?

You’re not alone. Almost everywhere you look, home sales are up – and prices are too.

With more of us spending time at home on account of the pandemic – and thanks to historically low interest rates – there’s strong demand for more spacious dwellings, leaving fewer homes for sale and considerable competition among buyers.

While many homebuying basics have not changed, there are some unique aspects to this booming real estate market to keep in mind – whether you’re just browsing listings or actively hunting.

Here’s a guide to homebuying during the pandemic – from determining your deal breakers to closing the deal.

Buying in a Seller’s Market

From the jump, recognizing the realities of the current housing market will help you reduce surprises and negotiate your search.

  • Up, up, up. Since the end of summer, total existing home sales are more than 20% higher than during the same span last year, according to the National Association of Realtors (NAR).
  • Prices on the rise. Entering the fall, the median home price was $313,000 – more than 15% higher compared to 2019.
  • Low supply. With fewer than 1.5 million homes for sale, housing inventory is at a record low at the current pace of sales and down nearly 20% from a year ago.
  • Going fast. Homes are staying on the market an average of just 21 days. Around 72% of homes are selling in less than a month, NAR stats show.

Homework

You already know why you want to buy a home – to be closer to family and in a more walkable neighborhood, perhaps.

Now it’s time to think it through. Start by defining your dwelling to help you recognize your next home when you see it. Ask yourself about must-have (and nice-to-have) amenities, which may be shifting in this time of COVID-19. Considerations include:

  • Office space. Many work-from-home arrangements are likely to continue in some shape, even after the pandemic.
  • Staying active. Working out under your own roof? Having dedicated spaces for keeping active helps you stay healthy at home.
  • More nights in. Keep in mind essentials for helping you unwind.
  • Pets. More furry friends have joined our families during the pandemic – they need their space too.
  • Delivery. With everything from groceries and takeout coming directly to our doors, consider the offerings you need to be available in your new neighborhood.

Also be sure to take a long view. Most homeowners stay an average of 13 years before selling a place, according to the NAR. With any home you may purchase soon, ask yourself: Is this the right home for after the pandemic too?

Weigh the benefits of remaining in your current home – or waiting until the market becomes more buyer-friendly.

Obey Your Budget

With historically low interest rates, borrowing money hasn’t been this cheap in generations. Still, given mixed economic news, knowing how lenders are tightening requirements can help keep your bottom line balanced.

  • Credit score. The best terms tend to be available with higher FICO scores.
  • Prequalification. A mortgage loan officer will help you narrow your search into a set price range before you begin house hunting. Especially in a competitive buying market, this step can strengthen your position as a buyer when you make an offer on a house.
  • Cost ceiling. With bidding driving up prices, keep in mind this rule of thumb: Strive for your house payments to be lower than 30% of your gross income.
    • Don’t forget homeowners insurance, property taxes and maintenance fees in your calculations.
  • Down payment. Know that 20% down isn’t a requirement. Several down payment options are as low as 3% – and sometimes as little as 0%.

Find Your "No Place Like"

Reducing your delays and buying demands can be key in navigating the listings landscape – and snagging a home also eyed by other buyers.

  • Set your expectations. Get a sense of price-per-square-foot of homes in the areas you’re looking. This measure can help you compare dissimilar dwellings and their value.
  • Real estate agent at-the-ready. Ask around for recommendations, especially regarding agent responsiveness.
    • Lean on your agent to negotiate a bidding war and know when walking away is in your best interest.
  • Lay of the land. Real estate alerts on your phone or by email will inform you of new listings ASAP.
    • Expect limited open houses and individual tours, especially in homes still occupied by sellers.
    • Pictures, video walk-throughs and 3D tours available on real estate sites can help you spot potential issues.
    • Low inventory means your real estate agent could suggest seeing fewer homes before starting to submit offers.
  • Sweeten the deal. Multiple buyers interested in the same home means you will be required to submit your absolute best bid.
    • To be properly competitive, your price offer could exceed the listing amount – and you may need to forgo once-common contingencies, like smaller repairs.
    • Know your upper price limit ahead of time.
    • Bidding wars mean sellers are less likely to leave behind large appliances and more inclined to accept cash offers.
  • Stay positive. Winning-by-bid may take a few tries. That’s OK – it’s part of your journey to the right place.

Close Strong

Once your offer’s been accepted, congratulations are almost in order. Nail these final steps.

  • Loosen the logjam. Given the plethora of property purchases, prepare for delays, but cause none of your own.
  • Be flexible, but firm. Push to stay on-schedule as your closing date nears, especially if you have a deadline to vacate your current living space. Build in cushion time, if doable.
  • Closing. Some states are allowing final paperwork to be completed remotely.
    • It’s always appropriate to ask questions – have your real estate agent on-call, if not present – before your signature hits the page.

Welcome to the Neighborhood

For most of us, our homes are one of our greatest assets. They’re also where we and our loved ones rest, relax and feel safe together – during the pandemic and after.

Smart homebuying requires preparation, patience and perseverance, even in normal circumstances – and especially in today’s market. Stay informed and safe. Happy hunting.

NOTICE: This is not a commitment to lend or extend credit. Conditions and restrictions may apply. Information and offers are subject to change without notice. All loans are subject to credit and collateral approval. Not all loans or products are available in all states.

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This information and recommendations contained herein are compiled from sources deemed reliable, but are not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or are offering any tax, accounting or legal advice.

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