Low interest rates, the eagerness of buyers who have waited to purchase, combined with a still affordable and robust housing market has created a push for home ownership within several generations of people. With businesses reopening throughout the country and some experts indicating early signs of a much-anticipated economic recovery, we have seen more home buyers actively entering the housing market this summer. As we see the country trying to recover from the spring’s Covid-19 set back we are seeing that housing is truly driving the U.S. economy forward.
However, with so many buyers looking for homes to purchase and so few houses for sale right now, there’s a disconnect between supply and demand. In Chattanooga, as of today, there are just over 1,500 homes on the market, available for purchase. This imbalance is pushing home prices upward while driving more bidding wars and multiple-offer scenarios. Danielle Hale, Chief Economist at realtor.com explains:
“People are surprised that prices are rising, not falling, because in the last recession home prices fell, the difference this time is the severe shortage of homes for sale…We are seeing bigger price increases with [a limited] number of homes…That is likely to lead to more competition and potentially multiple offers and bidding wars.”
According to the recent Realtors Confidence Index (RCI) survey conducted by the National Association of Realtors (NAR), this trend is growing:
“On average, there were about three offers on a home that closed in May, up from just about two in April 2020 and in May 2019 (2.3 offers).”
HousingWire also indicates:
“42% of homeowners who made a purchase during the January to May time period ended up in a bidding war, demonstrating the strong demand for homes amid low inventory.”
With more people returning to work we’ll continue to see the number of interested buyers increase. We are seeing homes in the median price range in Chattanooga and North Georgia entering the market and receiving up to 20 offers immediately. Just this week, our team had two listings enter the market and have offers of more than $20,000 over asking within the first 24 hours. The multi-offer situations are causing fatigue with both buyers and agents alike. If you are among the many people looking for a home to buy this summer, it’s important to ensure you have the right guidance from the start. This way, you make sure your offer stands out from the crowd when it really counts. Here are a few tips to follow.
1. Hire a Trusted Local Expert
A trusted local real estate professional matters more than ever right now, as noted in a recent survey shared by NAR. In fact, according to respondents, 54% of buyers and 62% of sellers indicated that “Particularly during the pandemic, a real estate agent’s guidance is especially valued.”
We’re not in a normal market. We are in one of the greatest health crises our nation has ever seen. The pandemic has had a dramatic impact on the journey consumers must take to purchase a home. To successfully navigate the landscape today, you need a true expert on your side that has experience both negotiating the best price for you without adding unnecessary added extra costs. An experienced buyers agent will not only understand how the escalation clause works, but will be diligent in finding a way to make sure you are protected.
2. Get Pre-Approved for a Mortgage
When there are more buyers than sellers on the market, the process to find a home becomes much more challenging. One way to show you’re serious about buying a home is to work with a lender to get pre-approved for a mortgage before starting your search. With a pre-approval letter, sellers will see your true desire to buy this year, potentially helping your offer rise to the top. Is it also important to use a local lender, not a company with a really good commercial. A local lender knows the market and often will be able to negotiate better rates for you.
3. Educate Yourself About the Market
It is key to know what is available and what your dollar will buy, and it is just as important to know what fees and expenses will be added to your home purchase before hand. Unfortunately, especially with first time home buyers, we see buyers having unrealistic expectations, often fueled by their parents or peers and their past experiences, which may have been in a different market. Being decisive with your home search is really important as well.
Look online and see what your dollar will really purchase instead of passing on a home that is in your budget and fills most of your criteria. Having a realistic expectation of the process, from finding a home to whether or not you will have to pay closings costs puts you in the drivers seat when it comes to having your offer make the successful transition to the closing table.
Bottom Line
If this is the year you’re ready to buy, let our Chattanooga Property Shop team of buyer specialists sit down with you for a no obligation consultation to get you through this market. Contact us today.
