Will More Buyers This Year Make it Harder for You to Buy a New Home?
The supply of homes has far outpaced the demand from buyers over the past couple of years but with mortage interest rates projected to fall this year it could become more difficult to buy the home you want, at the price you’d like.
The graphic (below) shows the rate of supply and demand for homes over the past four years and illustrates how demand fell with interest rate increases. The graphic also shows the pattern of home buyers every spring. With interest rates set to decline this year it could set the stage for competition amongst buyers and an increase in home sale prices.
Back in 2020 and 2021 when interest rates were as low as 2.8%, buyers flocked to see homes for sale and many found they couldn’t compete with others offering higher purchase prices, cash payments, escalation clauses, shorter closing times, and even offering concessions to sellers such as paying for their closing costs. However, as rates increased in 2022 and 2023 buyers held off and home sellers had to hang on to their properties longer and give concessions to prospective buyers.
While it’s still a market that favors buyers, that pendulum could swing this spring when interest rates go down. Not only will there be more buyers looking for homes but there will be more aggressive buyers including hedge fund companies who will try and offer higher purchase prices than you may be able to pay. With greater demand will also come an increase in home prices which will work against buyers.
So, how to beat the system when lower interest rates make for a more competitive real estate market? ‘The early bird gets the worm’ as they say…
Get pre-qualified for a home loan now. Talk to several mortgage lenders to get the best rates and advice on how to raise your credit score. This will save you time and worry before finding a home you want. You can find home lenders on this website on the ‘Lender’ page.
Start looking at homes early. If you think you want to buy a home this year begin looking at homes now to see what the market is doing and how you need to adapt. Compare prices, square footage, acreage, and features of the homes to get a better idea of what you’re looking for and how much it will cost.
Talk to a real estate professional to learn what is currently happening in the market. I routinely send my clients market data reports and home listings fitting their search requirements. That way, they have a head start on finding the right home.
Searching early for a home is the most important part of this process. If you think you’re definitely going to buy a new home soon, or even in the near future, consider this: would it be easier to buy a home at current interest rates and refinance your home when the rates drop or try to buy a home later when everyone else is? I recommend to my clients that they consider the former option to save them the stress of competing for a home and having to pay more money for it. I have rarely encountered a home owner who wished they had waited to buy a home and I have talked to hundreds who were glad they bought their home when they did. Even in tough economic times, those who hung onto their homes profited by doing so.
I’m happy to send you market reports and home listings as well as provide a home value analysis on your current home. Just ask, I’m happy to help.
Utah’s home supply and buyer demand over the past four years. Buyer demand will rise again this spring and with lower interest rates the competition for homes could be fierce.