If you’re in the market to buy your first home in this market, it’s probably felt like an uphill battle. There aren’t a lot of houses to choose from, and the minute a house gets listed there are a ton of offers to compete against.
Adding to the stress, now you’re probably worrying about the news that interest rates are going up, and hoping to scoop up a house before rates go up too high and make buying a house more affordable.
But then there’s the news about pending home sales dropping over the past couple of months, which may sound hopeful to buyers.
Is there light at the end of the tunnel? Are buyers putting on the brakes and waiting to see if house prices come down due to rates rising? Should you wait and try to time the market?
All understandable questions buyers may be thinking about, but speculating and trying to time the market is a gamble that may not pay off as one would hope. Here’s a few reasons why:
- Even if interest rates go up, prices may not come down enough to make buying a house cost less.
- Inventory won’t likely increase enough to outpace demand. That can only be solved by either more houses being built, or more Baby Boomers listing their houses, which hasn’t happened as anticipated.
- Trying to time the real estate market is almost impossible for even a seasoned real estate investor, let alone an average homebuyer.
So timing may not be the best bet, but time itself can be on your side as a first-time buyer in any market, but especially this one.
Part of the reason why there are so few homes for sale, and pending sales have dropped over the past few months, is due to the fact that many homeowners worry about where they’ll go if they sell their house. Think about your concerns as a first-time buyer having to find a house to begin with, and then hope you can beat out a bunch of other buyers. That concern is even greater for someone who already owns a house. Even if they truly want to move, it can be scary to pull the trigger and list their house because they have legitimate concerns that they won’t be able to find and buy a house.
This is where you, as a first-time buyer, have an advantage. Most sellers would love to have time on their side to look for a home once they get their house under contract. Sure they want as much money as they can get for their house, but time to look for a house can be more valuable than a higher offer another buyer makes.
Rather than put your house hunting on hold and speculating that prices will come down, or more inventory will magically appear, focus on what you have to offer that other buyers can’t offer to a seller—as much time as they need to find a house to buy.
This doesn’t mean you can get away with a lowball offer against other buyers, but it can give you the upperhand. So consider writing terms into your offers that give the seller as much time as they need to find a house.
And perhaps your real estate agent can even use your ability to wait as a reason to reach out to their network of past clients and other agents. There’s no guarantee, but he or she might be able to find a seller who hasn’t listed their house because they’re concerned about timing. It could be just the right thing that gets a hesitant homeowner to sell, and gets you a house to buy!