As the flowers blossom and the weather warms, prospective homeowners will be flocking to open houses to scope out their dream properties. Spring is undoubtedly a prime time for home buyers. The increased demand however, can have many buyers losing opportunities and missing out. Here are a few spring home-buying trends to watch out for.
It’s a seller’s market in spring, as prices are projected to rise. As a result, many sellers have hesitated to put their homes on the market thus limiting the inventory available. Many sellers are now waiting for optimum price gains and buyers are becoming increasingly anxious to buy before mortgage rates go up. Inventory is projected to remain near historical lows this spring, and this makes for a really tough buyer’s market.
The limited amount of inventory this spring means bidding wars are on the rise. Thirty-three percent of sales were at or above the asking price, a measure that is indicative of bidders. To gain the edge in a bidding war this spring, buyers should include escalation clauses to their offer. An escalation clause is the amount a buyer would be willing to pay above a competing bid. Forgoing certain contingency clauses could also sweeten the pot; however, buyers should consult with agents about which are safe to remove.
One of the reasons for the high buyer’s demand is the low mortgage rates. Mortgage rates are currently at historical lows. Interest rates have been decreasing over the past 10 months and are currently hovering around 4 percent. Many experts agree that these rates can’t get much lower and are instead projected to increase throughout 2015. It’s a tenuous time for buyers who are looking to jump the gun on these low interest rates.
First-time home buyers have made up a limited portion of the market. Currently, around 33% of buyers are first time. This has traditionally been attributed to financial constraints such as loan restrictions, higher down-payment requirements, and student loans. However, a new 3 percent down payment program from Fannie Mae and Freddie Mac should allow more first-time homebuyers to purchase homes this spring. Expect first-time homebuyers to increase.
This spring is shaping up to be a heavy seller’s market. If you are a buyer, think strategically and be prepared for the bidding wars and limited inventory that high demand brings. If you are a seller, take advantage of the high demand to get the best price possible for your home.
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