by Maurie Backman | Updated July 19, 2021 - First published on May 31, 2021
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Home values are soaring -- and buyers are feeling the pain.
Buyers in today's housing market are growing increasingly frustrated -- home values have soared as low mortgage rates and limited inventory have created a surge in buyer demand.
In April, home prices reached their highest value since 1999. The median sale price last month was a record $341,600, according to the National Association of Realtors. That represents a 19% increase from just one year ago.
Not only are homes selling for more money, they're flying off real estate sites. In April, it took 17 days on average for a home to sell, and 88% of homes sold last month sat on the market for less than a month.
Clearly, this is great news for sellers, who have the upper hand in this scenario. But for buyers, it's been a source of aggravation. Many buyers are finding that neighborhoods within their reach just a year ago are now out of the question. And many are outbid by buyers willing to go many thousands above asking price to get an offer accepted.
If you're having a hard time navigating today's housing market, you may wonder what your next move should be. Here are some options.
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Housing inventory typically picks up during the spring, but this year, that hasn't happened. It could pay to take a step back from your home search if it's been fruitless thus far. You may find that inventory opens up in a few months, and when that happens, home prices are apt to come down.
When it comes to buying a home in a tough market, sometimes, persistence can be the ticket to success. You may decide that, despite the challenges you face, you want to keep on seeking buying opportunities. And there's nothing wrong with that.
If you're eager to buy a home to capitalize on today's low mortgage rates, you may need to reset your expectations and take a different approach to your search. That could mean looking at a condo or townhouse if you can't afford a standalone house. Or it could mean looking in a different neighborhood -- perhaps one with fewer amenities, but with home prices that work better for your budget.
Another option? Partner with another buyer. If you can't swing a home on your own, see if there's a family member or friend who will go in with you. Granted, there are legal and logistical matters to work out if you're buying a home jointly with someone you aren't married to, but it's an option nonetheless.
Today's housing market is wonderful for sellers. For buyers, not so much. If you keep pursuing your home search, avoid the trap of buying a home that's over budget. The last thing you want to do is take on too much house and regret it.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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