Some housing analysts are concerned that the sudden rise in home prices could make homes more unaffordable again if the price increases outpace income growth, The Wall Street Journal reports. With shrinking inventories and more competition, buyers are finding they have less negotiating power in today’s market. Here are some tips to help home buyers be more successful in their purchases this spring:
1. Lowball offers, not such a good idea anymore: The days when you could scoop up a house for 20 percent less than the list price are now few and far between in the Myrtle Beach area. Homes are selling much closer to their asking price, 6% of the asking price was the last stat I read in Horry County. A good rule of thumb is if homes are selling below the list price in an area but are still being sold in less than two months to make an offer that is no more than 2 to 3 percent below the asking price. If homes are selling above the listing price in a neighborhood or condo building, the first offer should be at the full asking price. I’m getting into many multiple offer situations and having to offer more than the asking price and in some cases not winning the bid.
2. Bidding wars: In these multiple offer situations, higher prices, fewer contingencies and flexibility with when you can move in will be helpful.
3. Financing: A borrower can make a $1,000 monthly mortgage payment and qualify for a $222,000 mortgage at today’s low interest rates, compared to 2008 when they’d likely qualify for $165,000 when mortgage rates were around 6.1 percent — nearly double what they are today. Borrowers are able to withstand home-price increases because of the low rates, not because household incomes are growing, The Wall Street Journal reports. If mortgage rates tick back up to the 6 percent or 8 percent range, homes may look overpriced relative to incomes, according to housing analysts.