The real estate market is ever-changing, making it hard to keep up with the latest trends. So whether you’re a first-time homebuyer or a seasoned investor, it’s important to be well-informed about the market before making any decisions. Here are five things you need to know about the current real estate market:
- Home prices are rising: The median price of homes has reached $420,000, one of the highest increases since the economic crash. This trend is expected to continue as demand for housing outpaces supply.
- Mortgage rates are also rising: Interest rates for a 30-year fixed mortgage have been steadily increasing since the beginning of 2019 and are currently around 4.14%. While rates are still relatively low by historical standards, they are expected to continue to grow throughout the year.
- The inventory of homes for sale is low: The number of homes available is at an all-time low, with just 1.59 million homes available nationwide in February 2019, according to the National Association of Realtors. This lack of inventory drives up prices and makes it difficult for buyers to find their dream homes.
- Builders are struggling to keep up with demand: Housing started falling 5% in February 2019 compared to the previous year, mainly due to severe weather conditions across the country. This decrease in new home construction means that even fewer homes will be available for sale in the coming months, further exacerbating the inventory problem.
- Inflation is making everything worse: Inflation rates have reached 9% this year. The rise in inflation means buyers’ purchasing power decreases while the cost of building materials and land increases. This makes it even harder for builders to keep up with demand and further drives up buyers’ prices.
These trends are making it harder for people to buy a home. Thankfully, there are ways you can bypass some of these problematic trends. Here are some of those ways.
Get Government Loans
Traditional loans are becoming far more expensive than ever. Thankfully, there are government loans you can use. Here are some of them.
Federal Housing Administration (FHA) Loan
Loans are crucial in getting a home. If there is one government loan, you should get an FHA loan. This loan comes with various benefits. For starters, the credit requirements are lenient as compared to other loans. For example, you could have a credit score of just 580 and get an FHA loan approved. Secondly, the down payment is just 3.5%. These benefits are great, but it does have a caveat that it’s usually only meant for first-time homebuyers.
If you’re a veteran, then this is the loan for you. The U.S Department of Veteran Affairs offers this loan to help veterans buy homes with no down payment and lenient credit requirements.
Good Neighbor Next Door Program (GNND)
HUD created the GNND to help revitalize certain areas by providing housing opportunities to people working there. You may be eligible for this program if you’re a teacher, firefighter, or law enforcement officer. You can get a 50% discount on the list price of a HUD home as long as you live there for three years.
Get a Fixer Upper
A fixer-upper is a home that needs repairs, renovations, or both. This could be anything from a cosmetic update to a complete gut job. The benefits of buying a fixer-upper are that you can get more home for your money and make the repairs yourself to save even more money.
The downside of buying a fixer-upper is that it can be a lot of work and take longer to find the right property. But if you’re up for the challenge, a fixer-upper can be a great way to enter the housing market.
The best part about this is that you can flip these homes. Home flipping is when you buy a property, make the necessary repairs and updates, and then sell it for a profit. This can be a great way to make some extra money and get your feet wet in the real estate market.
Look for Alternatives to Traditional Housing
Other options are available if you’re struggling to find a traditional home that fits your needs. Here are some of those options.
- Tiny homes: These homes are becoming increasingly popular as an alternative to traditional housing. They’re more affordable and easier to maintain than a regular-sized home.
- Modular homes: Prefabricated homes built in a factory and assembled on-site. They’re usually more affordable than traditional homes.
- RVs: Moving homes if you’re looking for something more mobile. You can often find used RVs for a fraction of the cost of a traditional home.
The current real estate market is difficult for buyers, but there are ways to bypass some problematic trends. By following the options above you can purchase a home today despite the trends.