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No inventory, no problem: Where homebuyers can turn in a sellers’ market

by Boston Agent

As today’s homebuyers continue to navigate an ever-evolving real estate market with limited inventory and climbing home prices, many are wondering just how attainable the dream of homeownership is. In some cases, buyers are holding off on purchases altogether. In fact, a recent survey from TD Bank found that 30 percent of first-time homebuyers are willing to wait out rising prices before purchasing a home. But how long can they sit on the sideline? And ultimately, is that the best answer?

 

In the greater Boston area, prices continue to soar with recent figures from the Greater Boston Association of Realtors indicating that March median pricing came in at $789,500 for a single-family home, reflecting a 9.4 percent rise. Condo prices climbed at a similar rate with the median price amounting to $675,000.

 

With rising prices and the days of historically low interest rates also beginning to shift, lenders and agents must do their part in educating buyers on how they can best prepare in this highly competitive market and identify viable alternatives like fixer-uppers or new construction, to increase their chances of success.

Ensuring your client is ready

As sellers seek the fastest solutions in getting their home off the market, ensuring buyers are ready to submit a competitive offer with their accompanying bank statements, employer verifications, etc. is imperative to the process. However, in many cases the asking price does not reflect the potential cost of bidding wars, closing costs and other factors. Agents and lenders need to educate buyers on how and when to go over the set asking price to avoid hurting their personal finances. Agents and lenders should also address budgeting for potential renovation costs or other home upgrades clients wish to make, as these can impact the total cost of their future home.

Sometimes you have to start from the ground up

While supply chain and labor issues have slowed the construction of new units since pre-pandemic days, buyers and builders are resilient and for those willing to wait, new construction could be the way to go. Taking clients for lot showings in addition to showing existing homes could be helpful in showcasing to buyers what may be available and best suited for their needs. March’s U.S. housing starts demonstrated that although inventory is low, homebuilding activity continues to make slow but encouraging strides. According to the U.S. Census, starts rose by 0.3% month-on-month, rising slightly above market expectations, led primarily by multi-family units.

 

Finding the perfect home within budget is nearly impossible in many markets, however constructing one from the ground up or renovating an existing home may be the best option for buyers struggling to find a home that fits their criterion and is within their price range. Encouraging buyers to speak with a lender to understand the differing qualifications required by a construction loan is an important part of the purchase process for today’s homebuyers, particularly first timers, as many aren’t as well versed on the process or what it takes to secure a construction loan compared to a traditional loan for an existing home.

 

Starter homes are also a great way to enter the real estate market for those willing to compromise on finding their forever homes. Upgrading a starter home may also be less straining on personal finances than buying a move-in ready home. Depending on a client’s renovation timeline, existing equity and unique personal finances, these renovations can be financed through a number of methods like a cash-out refi, home equity loan, HELOC or in many cases through an existing credit card or personal loan.

 

Regardless of budget, real estate agents and lenders should do their part to ensure avid homebuyers, who may be ready to go well over their initial budgets to find a home, stay within their financial boundaries so they don’t regret the purchase. Managing expectations of today’s market conditions is the best start to the conversation, along with gauging a client’s interest in alternatives like new construction or starter homes. Realtors and lenders may find these are the best options for some buyers to broaden their home search criteria.

 

 

Maryruth Ryan

Regional Mortgage Sales Manager

Massachusetts

[email protected]com

 

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