Here Are 2 Reasons Why House Hunting Could Become More Challenging for Potential Buyers

For many people, homeownership is a big goal. But it requires a lot of money and planning to buy a home. Homeownership is becoming more expensive for the average person as the cost of homes rises in many parts of the country. Are you thinking of buying a house? Finding a property to buy may soon become more challenging. I'll explain the top reasons why below.

Many current homeowners want to keep their existing rates

Mortgage rates can significantly influence the housing market. According to Freddie Mac, the weekly average mortgage rate was 6.71% for a 30-year fixed-rate mortgage during the week ending June 29, 2023. Three years ago, for the week ending July 2, 2020, the average rate for the same type of mortgage was 3.07%. That's over double the average rate three years ago -- not great news for wannabe buyers who plan to finance their home using a mortgage loan.

With the difference between those rates, it's easy to see why putting your home on the market now would be undesirable -- unless it's necessary due to a life change, like relocating for a new job. Many current homeowners are staying in their homes even if they've toyed with the idea of selling because they want to keep the lower interest rates they currently have.

Housing inventory is low

Since many homeowners are staying in their homes, fewer homes are listed for sale. According to Realtor.com, new home listings were down 29% nationwide compared to a year ago for the week ending June 24, 2023. This information is worth knowing if you plan to start house hunting soon. Having fewer properties available can make your search challenging.

Housing availability varies greatly depending on where you live. But it's a good idea to get a feel for the availability of homes to buy in your area before you officially start house hunting. With fewer homes available, getting an offer accepted could prove to be more difficult.

Since fewer homes are on the market, the competition is greater as more hopeful buyers put in offers. According to Zillow's May 2023 Market Report, the typical U.S. home value rose 1.4% from April to May 2023. With this information in mind, you may need to offer more than you planned to get a yes from a seller.

As you search for a home to call your own, keeping your budget in mind is essential. If you put in an offer for a home that is beyond what you can comfortably afford, you may become house poor, which could negatively impact your personal finances.

Be realistic during the home search process

As you look for potential homes to buy, it's best to remain realistic. If you're struggling to get an offer approved or if there are few homes available that fit your budget, you may want to hold off until the market improves. Waiting could prove to be beneficial.

If you can stay in your current home for a while longer, you can continue adding cash to your high-yield savings account so you're financially ready when the time comes to buy. If you plan to buy soon, review our list of the best mortgage lenders to explore your lending options.