You Need to Be Prepared in a Competitive Housing Market

The headlines everywhere are screaming “It’s a competitive housing market!” What does that mean for you? Does it effect your search for a house?

What is a Competitive Housing Market?

First, it’s probably a good thing to understand what is meant by a competitive market. It’s based on market absorption, the number of houses for sale vs the number of houses that have sold in a given month.

Rather than the national market, pay attention to the regional housing market where you’re interested in buying. There will always be a variation in different markets throughout the country.

With mortgage rates as low as they are right now, it’s hard not to jump on the bandwagon and look for a house. The reality is if you can afford to, it might be to your advantage to wait until the market becomes less competitive.

How do you buy a house in a competitive market?

Sometimes life doesn’t wait for the housing market to be perfect for you to move. Perhaps you have been transferred. Or have a baby on the way and just need a larger home right now. The best thing you can do is be prepared.

What steps can you take to be prepared?

Before you see your real estate agent there are a few things that I think would be helpful for you to know:

1. What are your minimum requirements?

The number of bedrooms and bathrooms. What about a garage; how big? Does it have to be an open floor plan? A one story? Basement? A master with an ensuite bath? First floor laundry?

If more than one person will be involved in the decision-making process, make sure you’re both on the same page before you involve a professional.

I would also suggest you prioritize your list. Can you live with a one car garage rather than a two? Can you live without a family room? Is an eat-in kitchen necessary? Decide on which items are non-negotiable before you start house hunting.

2. What is your budget?

If you’re just starting out, go to your bank and get pre-qualified for a home loan. This will give you an idea of your budget before you start your search. You may not be able to afford as much house as you think, or you could be surprised and afford more. The bottom line is, know how much of a house payment you’re comfortable making (not the maximum for which you prequalify). Don’t forget that you will need to allow for things such as insurance, taxes and possibly homeowner association fees in your monthly payment.

3. Have your search location narrowed down to a few neighborhoods.

Research local taxes, schools, and crime rates before you start looking for houses. A very desirable neighborhood might not have many houses available, so make sure you have one or two back-up neighborhoods researched which allows more flexibility.

4. Educate yourself on how to look at a house with a critical eye.

In a competitive market you need to be ready to make an offer quickly. By knowing a few things about how to evaluate a house, you’ll be ahead of the game. You can start by getting a free download that includes the most commonly found problems during home inspections.

Next Steps

I did some searching and found that there is a general consensus on what you need to do to be prepared once you are ready to start looking at houses.

1. Find and experience real estate agent.

You’ll need someone who knows how to navigate a competitive market.

2. Have financing pre-approved (rather than prequalified).

If you’re one of those lucky folks shopping with cash in hand, good for you. If not, to compete you’ll need to have your financing in place before you make an offer.

3. Be ready to act quickly!

Be prepared to go out to see a house at a moment’s notice. By knowing your housing requirements, neighborhood, and how to evaluate a house with a critical eye, you’ll be ready to put in an offer when you find the right house.

4. Make a strong offer.

This is where the skill of an experienced real estate agent will help you most.

5. Don’t take rejection personally.

Sellers are worried about their needs, not yours. If your offer is not accepted, it’s the offer that’s rejected, not you. The right house is out there, just keep looking.

Are You Prepared for a Competitive Housing Market?

It can seem overwhelming, but the fact is, people are finding the homes of their dreams every day, whether or not the housing market is in their favor. 

It takes perseverance, but it’s not impossible. Take it one step at a time. By being prepared you too, will find the right home even in a competitive housing market.