If I could do one major financial decision in my life, it would be the timing of my home purchase. I don't regret becoming a homeowner, but I do regret buying a home when the housing inventory was tight. According to a recent article by the New York Times, prospective buyers are competing for available homes. The article cites a recent report by Zillow that shows the inventory of homes for sale is down by about 14 percent compared to one year ago.
My husband and I put a deposit down on our new construction Florida home without even physically visiting the subdivision. We were just glad to find a subdivision that still had lots available since any available inventory would quickly disappear. In the long run, we got duped into paying too much for our home. Our $180,000 new home is now worth only about $125,000.
Making a fair offer
Real estate experts are advising clients to make strong offers and going above the asking price. I think a better strategy is to wait until it's a buyer's market or just make a fair offer. For people who have to buy a home when inventory is tight, it's best to shop around. People who have at least a dozen possibilities can create a position of power. Inventory is always tight if a prospective homebuyer falls in love with only one or two properties. We toured about two dozen different new home developments before finding the one that offered the best deal.
Saving up cash
While some people are jumping to buy homes because they are worried interest rates will go up, I don't think there is much of a hurry. I wish we had lived with relatives longer so we could save up more cash for our home purchase. It would have been even more ideal if we could have made an all-cash deal. People who pay cash for their homes don't have to worry about interest rates. Also, most home sellers prefer cash deals which can help when inventory is tight.
Waiting for the market to change
It doesn't seem to take very long for the housing market to shift from a buyer's or a seller's market. I put my townhome on the market after living in it for just one year. I received only a few offers below my asking price. I finally decided to take the townhome off the market. In just 6 months, the real estate market completely shifted. When people started coming to my door asking if I'd be willing to sell, I knew it was a seller's market. I was able to sell at a profit just by waiting it out. I just wish I had waited to buy another home until the market bottomed.
I can understand why home buyers are desperate to buy homes. Not only are interest rates still low, but rent is high. I am not sure I could afford to rent my own home at the going rental rates. If I had the opportunity, I'd live with relatives while saving up money for a home purchase. By the time I had the cash I needed for my dream home, the housing market would probably be back to the buyer's market.
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