Buying a house next year? Here's how to prepare:
The years seem to be flying by with increasing speed, and it's safe to say that 2019 was no different. Did you get everything done you wanted? What do you plan on doing in the new year? If buying a house is on your 2020 to-do list, now's the time to prepare.
Years may be measured in months, hours, minutes and seconds, but they're also measured in moments, and 2019 was a rather momentous one within the housing market. While home prices continued to rise on a year-over-year basis - for more than 90 straight months now, according to the National Association of Realtors - builders made some solid gains in improving supply levels throughout much of the country. This results in price increases slowing down, which allows buyers - many of whom are earning appreciably more thanks to steadily rising incomes - a chance to catch up.
Plus, with housing starts jumping nearly 14% in October, based on estimates from the National Association of Builders, remarkable growth in inventory could make 2020 the first year in quite some time that asking prices slide. In short, if you're on a budget, next year just may be the perfect time to start seriously looking for a house, whether it's your very first or likely the last.
How do you prepare now so you're ready later? Here are a few suggestions:
Attend open houses
Even though actually making an offer on a home may not happen for several more months, think about attending open houses you see advertised. Pictures and descriptions in online listings are great, but they don't give you the full story on what a house looks and feels like. Take some time to go to as many as possible so you can get a sense of what homes or condominiums are selling for. These visits can also provide added context on the exterior and interior housing features you'd like in your soon-to-be home and those that are turn-offs.
Get your finances in order
If you do anything in the next several months to prepare, make it this one. Once you gain pre-approval for a mortgage, you'll have the flexibility and understanding of how much you can afford to spend, which can help you narrow down your search. But in order to obtain such a letter, your lender will need to assess how you're doing financially. Depending on how imminently you plan on entering the market, try to avoid any major purchases if you can. Also, see if you can raise your credit score by paying off bills prior to their due date and keeping any credit card balances low.
Write your representative or senator
As the NAHB points out, there's no silver bullet to housing affordability. Lowering asking prices will take a united effort, from the consumer public, the business community as well as the government. One way of going about this is by lawmakers reducing red tape. Did you know that 25% of the cost for housing construction is attributable to regulatory requirements? To make it cheaper for builders to develop, Congress will need to act. Send a letter to your representative, urging them to support legislation that helps to lower the cost of development. The savings may be passed on to you.
Write a persuasive letter
Bidding wars can be stressful and they typically end in favor of the one who offers the most money. That's not always the case, though. You may want to think about writing a letter that explains why you're the right person for a house. Sellers do take more into account than dollar signs when evaluating offers. Your letter just may win them over.
Happy New Year and best of luck in all your homeownership endeavors in the days and months ahead!