Put Off Your Home Search in 2020? 3 Reasons to Start Looking in 2021
by Maurie Backman | Updated July 19, 2021 - First published on March 17, 2021
Here's why it pays to get the ball rolling on finding a home now.
2020 was a tricky time to buy a home. Not only was the U.S. economy looking very shaky, but the coronavirus pandemic threw a lot of people's plans off course. And while the pandemic is still with us, there's reason to be hopeful that things will start to normalize during the year, especially as vaccine availability increases.
But if you're going to attempt to buy a home, you may not want to put off your search much longer. Here's why you should start looking now.
1. Rates are starting to climb
On a historic basis, mortgage rates are still very competitive. But they have risen quite a bit compared to last year. In fact, the average 30-year mortgage is now sitting at over 3%, whereas for the second part of 2020, it was well below that threshold. Now, we don't know if rates will continue to climb and at what point they'll plateau -- they could even drop back down again. But given this recent trend, you may want to apply for a mortgage before it gets notably more expensive to borrow.
2. Housing inventory is likely to open up once more people get vaccinated
The latter part of 2020 saw record low housing inventory, and that, coupled with low mortgage rates, drove home prices upward. But there's a good chance inventory will open up in the course of 2021, especially as more people get vaccinated and feel comfortable welcoming prospective buyers into their homes. If that happens, you'll have more homes to choose from, and prices could start to come down. That will make the next few months a good time to look -- especially since there also tends to be a spike in listings during the spring.
3. Rentals could get more expensive
Renting a home could get more difficult -- or expensive -- this year. The reason? As things improve with regard to the pandemic, demand for rentals could rise as more people shore up their plans. But if you get moving on your home search, you may be able to close on a property before you're in a position where you need to renew a lease -- or find a new rental altogether.
How to kick off your home search
House-hunting is no easy feat, so here's how to get started:
- Use a mortgage calculator to see how much house you can afford. You can also use it to establish a price range that will help guide your search.
- Narrow down your target neighborhood. Or pick a few neighborhoods you're interested in and vet them for things that are important to you, like amenities and school systems. And if you commute to work, do a trial run to make sure it's manageable.
- Find a real estate agent to work with. Since you don't pay a fee as a buyer, there's no reason not to benefit from the expertise of someone who knows the area.
- Make sure you're a good mortgage candidate. Work on boosting your credit score and paying off debt to make yourself a more trustworthy applicant.
- Get pre-approved for a mortgage as you begin your search. That will help you know what homes are within your reach. Plus, a pre-approval letter could help sway a seller to accept your offer over another buyer's.
2021 could end up being a great year to buy a home, so if you delayed your home search last year, now's a good time to get moving -- especially if you've been saving for a home and are ready to take that leap.
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