Numbers Count: Spring competition starts heating up
Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.The numbers: Existing-home sales rose in January to the highest annual rate since July 2015, and average prices rose at the fastest pace since last April, according to data released February 23 by the National Association of Realtors. The West was the only region to see a decline in sales in January.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, inched up 0.4% to an annual rate of 5.47 million in January. Sales are now 11.0% higher than a year ago – the largest year-over-year gain since July 2013 when they were up 16.3%, the Realtors group reported.
The median existing-home price for all housing types in January was $213,800, up 8.2% from a year earlier. Home prices have risen year-over-year for 47 consecutive months.What counts: Since winter home sales and price appreciation are surprisingly strong, then I think we may want to prepare for another competitive spring buying season. But don’t despair. There are a few things potential buyers can do to help improve their chances of getting a home: 1) Get pre-approved. One of the first steps I recommend for any serious homebuyers is to consider getting a pre-approval letter from a lender, which demonstrates that you have funds for a down payment and a lender willing to provide the mortgage you need to buy a home. That pre-approval letter may reassure a seller you are serious about buying a home. 2) Consider a bigger down payment. Not only will a larger down payment mean a smaller mortgage and lower monthly payment, it may also be viewed by some sellers as a “strong offer.” A buyer willing to invest more cash in a property may be seen as more committed. 3) Avoid contingencies. Frequently, sellers are interested in closing a sale quickly, and contingencies may delay the transaction. Making an offer contingent on the sale of your existing residence may be difficult in a competitive market, particularly if a home has multiple offers. 4) Find out what matters to the seller. Ask your real estate agent to find out what’s motivating the seller. Sometimes a seller may want flexibility to stay in the house until they find another home. Or perhaps a previous offer fell through and they want a “strong offer” so they can sleep at night till closing. Knowing the seller’s situation, you can tailor your offer to those needs. For example, writing a “buyer’s letter” can strengthen your offer by explaining your interest in the property and why you are the ideal buyer.