The stakes couldn’t be any higher than they are right now. All across the United States, we have seen a highly competitive housing market for a few years now. Texas, in particular, is seeing an increase in buyers, especially in the Dallas-Fort Worth (DFW) metro and suburbs. With so many people relocating to DFW for jobs and other opportunities, it’s created a highly competitive market where there are more buyers than there are sellers. Both buyers and sellers are often faced with multiple offers on a home and a hike in home pricing. If you are ready to start searching for your perfect home, there are some steps you should take to prepare. But what is a buyer to do in such a hot housing market?
Do You Need To Buy A Home Right Now?
If you wonder if NOW is the right time to buy, that’s a good question. You should ensure you are ready to take on such a significant investment. For some home buyers, now is a perfect time. For others, buying a new home now might not be the best choice. Buying a home always involves risk, and that’s nothing new. However, today’s housing market means you may have to deal with a bidding war, a short supply of available homes for sale, and higher mortgage rates.
While these challenges are not the most ideal situation, it’s not impossible either. It may take you longer to find your dream home, but try to be patient. Don’t be in a rush and get into a bidding war for a house you aren’t absolutely sure you love. And don’t settle on a home you aren’t crazy about just because it’s available and in your price range. If you don’t have to move immediately (such as for a job relocation), take your time and wait for the right home within your budget.
Are You Willing To Live Here For The Next 5 Years?
You may not know what the future holds in the next five years. However, you should have a plan or idea. If you don’t see yourself living in one place for at least the next five years, you may be better off renting. However, if you are ready to hunker down in a new home of your own, make sure it meets your needs and is in a location you like. The longer you stay in the house paying down the mortgage, the greater your odds are of making money if you sell it later.
Can You Afford To Put 20% Down?
While it’s not a requirement to buy a home, putting 20% down will help you in the long run by keeping your mortgage payments on the lower side. It could also make your offer more competitive over other bidders who cannot put 20% down. Perhaps you’ve been saving and think you have enough, but with the current housing market’s increased rates, you may need to keep saving until you get there.
Will The Cost Of Housing Be Less Than 28% Of Your Gross Income?
A good rule of thumb when determining your budget for the cost of your new home is the 28/36 rule. You will need to do some research and run some numbers to predict what your household expenses would be in your new home. Make sure your maximum household expenses won’t exceed 28% of your gross monthly income. Also, ensure your household's total debt doesn’t exceed more than 36% of your gross monthly income. You may have heard of this as your debt-to-income ratio. If you follow the 28/36 rule, you should be able to afford the home comfortably.
How Much Work Will The New House Need?
As if the higher mortgage rates aren't enough, keep in mind that remodeling costs are up, too. National supply chain issues result in contractors being too busy to take on new projects. Unless you plan to DIY on home remodeling projects, this may not be the best time to take on a fixer-upper.
Owning a home is an excellent long-term investment if you can afford to compete in today’s hot market. Working with a realtor will help you understand how to navigate the current housing market challenges and make the best decision.
Contact us today to get started in the search for your dream home!