Knowing the ins and outs of your housing market can help you be better prepared once the time comes to make an offer and to secure a good mortgage rate.
With this in mind, Motley Fool analysts Kristine Harjes and Nathan Hamilton talk in the video below about three of the least active housing markets in the U.S. and what it could mean for potential new homeowners in these areas.
Kristine Harjes: Recently, we were doing some research about mortgages. We came across and article from our friends at NerdWallet. It was all about how active the housing markets are in different states. We wanted to share with you some of the findings from NerdWallet today.
Michael Douglass: This time we're going to look at the least active, so the states where loan originations applied for, funded, essentially home purchases in this case where they are low per 1,000 residents. If you look at the three states, we've got them listed out here: Mississippi, 5.9 per 1,000 residents; New York, sorry, on the lowest end at 5.2; West Virginia, 6.6.
Harjes: That was actually really surprising to me when I saw that. You look at the set of three states, and Mississippi, West Virginia, OK, sure. Then New York, that was an outlier for me, but it's the absolute lowest across the nation. When you're looking at that, regardless of whether you're surprised or not, why does it matter as a homebuyer?
Hamilton: It does matter whether it's a buyer's or a seller's market. That impacts what you're able to negotiate both with your lender -- who may be needing some more business because originations aren't as hot as what they may have been previously -- and also with the seller of the house. You can negotiate rates with your lender. You can negotiate closing fees that may be rolled into your mortgage. With the actual seller you can negotiate for a better price. Perhaps that home has been on the market a little bit longer versus if you're going to one of the hottest markets like Colorado, which NerdWallet's research showed was on the high end. You may not have as much of an opportunity to negotiate. You may have to deal with perhaps paying above list price.
Harjes: There is research that's worth doing here when you compare a state like Colorado to something like New York. The difference is more than 3x in terms of loan originations per 1,000 residents.
Hamilton: These are averages, so we definitely have to put it in context.
Harjes: For sure.
Hamilton: There are going to be pockets of Mississippi that are very, very hot and certain areas of Colorado that aren't going to be. You definitely have to do your research on the local market and know the ins and outs.
Harjes: As you're doing your research about the entire mortgage process, please give us a visit at Fool.com/mortgages. There's a ton of great content and resources there for you including our free guide called "5 Tips to Increase Your Credit Score Over 800."