When my friend insisted in January that 2024 would be the year she became a homeowner, my first thought was “good luck.” And yes, I meant that both sincerely and sarcastically.
It’s no secret that so far, 2024 is shaping up to be a pretty tough time to be looking for a home. In January, according to the National Association of Realtors, there were only three months of properties available on the market. That’s well below the six-month supply typically needed to fully meet buyer demand.
It’s not a secret either mortgages remain costly to sign. Between that and high housing prices, anyone buying a home in 2024 could find themselves with sky-high housing payments.
But since I of course want the best for my friend, when she asked me for advice as a home buyer for 2024, I told her to make sure not do these three things.
1. Wait for mortgage rates to drop
You’ll often hear that trying to time the stock market doesn’t work. The mortgage market is not much different.
It’s true that economists expect interest rate cuts from the Federal Reserve later this year. Once this happens, mortgage lenders could lower their prices.
But we do not know to what extent mortgage rates may fall. And a slight drop might not do much for buyers financially.
It is also difficult to know exactly When we will see lower mortgage rates. So I told my friend not to follow mortgage rates obsessively. Instead, I told her to go out and try to find a house she could afford – and by that, I mean a house that would allow her to spend 30% of her take-home pay or less on expenses. of housing. In my opinion, if she can afford a house based on the mortgage rate she can secure this year, she can always try to refinance and pay less.
2. Assume she can’t negotiate
Since there aren’t many homes available on the market today, you might assume that when a seller lists a home for sale, you should pay at least the asking price. This is not the case.
You never know when a seller might negotiate in exchange for flexibility. My friend, for example, isn’t trying to buy and sell a house at the same time. If anything, she’s currently living with people to save money, and they won’t be kicking her out anytime soon.
For this reason, she can close on a house immediately if a seller wishes, or delay its closing for five months. This flexibility is something she can use to her advantage by dissuading the seller from lowering the price. And if your schedule is not tight, you can do the same.
3. Buy at the top of your price range
As mentioned above, the general convention is that you don’t take on too much of a house as long as your monthly costs – including things like your mortgage, property taxes and home insurance – are limited to 30% of your net salary. But I advised my friend to try to lower her costs and keep her costs to around 25% of her salary.
The reason? Homes have a sneaky way of requiring expensive maintenance and repairs. Because my friend buys hers alone, she will only be able to rely on her income when things go wrong. So I think it would be wise for her to be more conservative about how much she spends. And I would tell anyone buying a house solo to do the same.
Today’s real estate market is tricky – there’s no doubt about it. But the advice above doesn’t just apply to my friend. This applies to almost anyone looking to buy. So take these words to heart as you try to navigate the market and close out 2024 with a mortgage and a home in your name.
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