Find out what to expect next and how to improve your chances of securing the right home for you and your family this year.
When COVID-related disruptions first hit the real estate market in March 2020, there was a significant deal of fear—and speculation that some homes might languish on the market until the end of the pandemic. Instead, 2020 turned out to be one of the most active real estate years in history, with buyer demand at an all-time high in many areas. This was fueled by a number of factors, including low mortgage interest rates and people’s growing desire to eschew densely populated cities in favor of more spacious surroundings.
Now we are a year in, and another spring housing market is on the horizon. As the vaccination rollout continues apace, what’s next for US real estate markets? Will they ever go back to business as usual? Will tight inventory levels turn off prospective buyers? What can we expect next? Here are some of the questions we’re hearing—and our best insights for the days ahead.
Will the spring homebuying season see a return to normal?
While buyer interest is still heightened, some buyers may be frustrated by a long search and too many rejected offers. That may mean that they’ll try their luck a little later in the year, once vaccinations have allowed the broader economy to return to something like business as usual.
As to the logistics of homebuying, including open houses and virtual transaction management, many of the changes begun in 2020 should stay with us for the long haul. Having gotten used to the convenience of virtual showings and a simplified, tech-driven process, many buyers will probably be reluctant to return to the old, more time-consuming style of in-person home searching.
Are you seeing an increase in buying activity already?
We have certainly seen an increase in buyer interest, and pre-approvals are up significantly on our website since the beginning of the year. However, low inventory in many markets is becoming a frustrating fact of life, and buyers may find themselves making repeated attempts to purchase a home with multiple offer scenarios. Now more than ever, it’s a sellers’ market in desirable suburban and rural areas.
How much time do buyers need in order to prepare to buy a home?
This depends in part on the prospective home buyer’s financial health as well as their ability to organize and submit needed information and documentation. This can be especially difficult for first-time homebuyers, who may be unsure what to expect or how to navigate the underwriting and approval process. The key is to begin the pre-approval process as early as possible in order to align your budget with homes in your desired area. At Simplist, that can take as little as five minutes, so there’s no reason to wait.
If a buyer is borrowing money from a relative for either a down payment or to deposit in a checking account, do they need to factor that into their timeline?
While would-be buyers can’t borrow money for a down payment (since that would affect their debt-to-income ratio), they can accept money as a gift from a family member. Be aware, however, that different mortgage lenders have various rules about precisely how much gift money can be included as part of the down payment, and how it must be accounted for during the underwriting process. Be sure to talk with your lender as soon as possible if you know that you will be using gift money as part of your funding.
How—if at all—is COVID-19 still affecting homebuying?
COVID-19’s primary impact on the process can be seen in its accelerated digital transformation: virtual consultations, virtual home tours, and even a socially distanced closing process have become more widely available. In addition, COVID-19 has had a significant impact on the types of homes and neighborhoods considered desirable.
While most trends over the past decades have favored smaller homes in close proximity to bustling urban areas, COVID-19 has certainly shifted many people’s priorities. Not only has it fueled a desire for more space and privacy, but it’s also made it possible for many workers to clock in from more or less anywhere. To that end, unencumbered by the need to plan for a daily commute, many families are ditching their city digs in favor of sprawling suburban sanctuaries.
How long does it take to close on a house in today's environment?
There’s still a gap between traditional lenders and technology-driven platforms in terms of the time it takes to close. One of the major bottlenecks right now is caused by a shortage of available appraisers. However, at Simplist, we are still closing most of our purchase loans in around 30 days. This provides a competitive advantage in multiple offer scenarios.
What are key questions you should ask a prospective agent before you work with them?
Make sure that your real estate agent is a local expert with a deep knowledge of the area you’re interested in and a robust professional network there. Work with your agent to craft the most attractive possible offer in preparation for multiple offer situations, while keeping in mind your budget. In addition, you’ll want to find out how many transactions your agent has closed recently and discuss the strategies they’re using right now to help make their clients more successful.
The convenience of an online platform like Simplist is essential in today’s fast-moving and competitive real estate environment. Start exploring your options by talking with one of our expert loan advisors so that you can shop for your new home with confidence. After experiencing our customer-centric mortgage origination process, you’ll be full of the joys of spring!