Buying a home can be a tricky process–especially in today’s real estate market. If you’re thinking of buying a home in July, here are a few key things you need to know.
1. Mortgage rates are still sitting near historic lows
We started off 2021 with the 30-year mortgage coming in at well under 3% on average. These days, you’re not going to find a fixed loan at under 3% unless you can swing a 20-or 15-year mortgage.
But make no mistake about it- today’s rates are still quite competitive. As of this writing, the average 30 year mortgage is just 3.148%. For every $100,000 you borrow, you’ll pay just $429 in principal and interest on your new loan. Now that sum doesn’t include peripheral home expenses like property taxes and insurance, so you’ll need to factor those into your budget, too. But from an interest rate perspective, there’s savings to be reaped.
2. Home values have soared
In May, the median listing price for a home was $380,000 on a national level, according to data from Realtor.com. That’s a 15.2% jump from last year. Meanwhile, larger metro areas saw an average price gain of 7.4% compared to May of 2020.
Of course, that $380,000 figure represents listing prices. But many buyers today are finding that they need to pay above the asking price on a home to get an offer accepted. That’s because so many homes in today’s market and winding up in bidding wars, where two or more buyers one-up each other on price in an attempt to sway a seller to work with them.
3. Housing inventory is still low
In May, the number of active property listings was down almost 51% compared to a year prior, according to Realtor.com. Meanwhile, the total inventory of unsold homes, including pending sales, dropped by almost 21%. Newly listed homes are down 25.2% compared to the typical listing volume the housing market saw between 2017-2019.
Limited inventory doesn’t just make it harder to find a home that suits your taste and budget. It also means that you’ll have to duke it out with other buyers over the homes that are available–hence the bidding wars mentioned earlier. Unfortunately, that can make buying a home more stressful and expensive.
Something else to note is that the real estate market didn’t see its usual spring housing boom this year. It could be that some sellers are holding off on listing their homes until they’re more secure with the state of the economy and the pandemic. As such, more homes could hit the market in July, but we can’t say for sure if that will happen.
Article credit to The Motley Fool.