The real estate industry in the United States is one of the largest in the world. It’s worth $10 trillion this year, despite the pandemic hitting the country a couple of years ago. However, it doesn’t mean the country has a surplus of homes for its people. Quite the contrary, the country is experiencing a massive home shortage.
Home Shortage United States
The National Association of Realtors (NAR) reported that the U.S. had a housing inventory of 1.48 million in 2020, down 21.8% from 2019 and the lowest level since NAR started tracking this data in 1982. It’s also estimated that the entire country is short of more than five million homes.
At the current sales pace, it would take just 2.4 months to deplete the available supply of homes on the market, which is far below the six-month mark and is generally considered a balanced market between buyers and sellers.
There are several reasons for this shortage, including:
- The baby boomer generation is aging, and downsizing, but not enough new homes are being built to replace them.
- The cost of building a new home has increased, due to the rising price of land, lumber, and other construction materials.
- More people are moving to suburban and rural areas, where there is less available land for new construction.
- The pandemic has caused many people to reassess their housing needs and want to move to larger or more affordable homes.
All these factors have contributed to the current housing shortage in the United States. So how can you exactly buy a house in such a competitive market? Start by going mortgage shopping first.
Mortgage Shopping
If you’re looking to buy a home soon, it’s important to start shopping for a mortgage now. With interest rates at historic lows and expected to rise in the coming months, it’s a good idea to lock in a low rate now.
Comparing mortgage offers from multiple lenders is the best way to ensure you get the best deal possible. Be sure to compare interest rates and any origination fees, discount points, and other costs associated with each loan.
Also, don’t forget about government loans! The Federal Housing Administration loan is one of the most popular programs for first-time homebuyers. It offers low down payment options and may be paired with down payment assistance programs. So make sure to check with them when going mortgage shopping.
Close Out Auctions Fast
If you’re looking for a more affordable option, consider buying a home at a foreclosure auction. These homes are typically sold at a discount, so you may be able to get a great deal.
Of course, buying a foreclosed home is not without its risks. You likely won’t be able to inspect the property before bidding on it, so there could be hidden damage. Additionally, if the previous owner couldn’t keep up with mortgage payments, that’s an indication that the property may have been neglected.
Still, if you’re prepared to take on these risks, buying a foreclosed home can be a great way to get a bargain on your new home.
Win The Bidding War
If you’re serious about buying a home in today’s market, you may have to face some competition. In a bidding war, the seller usually chooses the highest offer, so your bid must be as high as possible.
However, you don’t want to overpay for the property to win the bidding war. That’s where a real estate agent can come in handy. A good agent can help you determine how much the property is worth and how much you should bid. They can also provide advice on other ways to make your offer more attractive to the seller.
Consider Building a New Home
If you cannot find the perfect home on the existing market, you may want to consider having a new home built. This option is becoming more popular as the housing shortage continues.
One advantage of buying a new construction home is that you’ll be able to customize it to your specific needs and wants. You’ll also get to choose the perfect lot for your new home. The downside is that it can take several months (or even longer) to build a new home, so this may not be the best option if you’re looking for a quick move-in.
You can buy a home by following these tips, even in today’s competitive market. Just remember to start early, do your research, and be prepared to face some competition. With a little bit of effort, you’ll be able to find the perfect home for you and your family.
