Just about everywhere in the United States has a hot housing market right now. Where do you live? Oh, beautiful weather this time of year. And yep, that place has a hot housing market right now.
What’s a hot housing market and why is it so hot?
A “hot market” means there are more buyers than sellers. Demand is higher than supply. Housing prices are likely higher because of this.
As for what caused our current hot market, you can look at a few factors:
- First, COVID forced a lot of people to work from home. Spending that much time at home got people thinking: it may be time for an upgrade or more space. Expand your current home? Or buy a new one?
- Another reason is that people have, by and large, avoided travel for a year. All those vacation expenses built up some savings. And, hey, what better way to spend that money than to make that move you’ve been talking about.
- Then you’ve got interest rates. When they’re low, they create a buzz. The real estate market gets covered more on national news which feeds the frenzy. While the rates are low, people can buy more home with a lower monthly payment.
- Mix those reasons with the fact that employment numbers are relatively good (relative to the 2008 recession, that is) and you’ve got good priced, good condition homes flying off the neighborhood shelves.
Is a hot housing market good or bad?
Well, for homebuyers, a hot market isn’t great. But if you’re aware of watchouts and play your cards right, you can still find a good home for you. One of the biggest watchouts we’d recommend you avoid is falling in love with a home and either paying way more than what it’s worth or overlooking faults from the inspection.
We have a few other tips, too. They’re good in any housing market, but especially a hot one.
5 Tips to Navigating a Hot Housing Market
- Get pre-approved. If you don’t get pre-approved, odds are your offer will be too slow and you’ll whiff on a house you like. Learn more about preapprovals.
- Lock in on your number. What is the most you’re willing to pay? Figure it out. Be realistic about what you can afford. Then stick to that number, especially in a bidding war.
- Appraisals are taking longer. An extension or extended close date is possible. Contracts may be 45 days or longer in markets with excessive appraisal turnaround times.
- Introduce your lender to your realtor. Teamwork makes the dream (home) work. Make sure each person is comfortable with the other. Help them help each other to help you.
- Be patient. Be reasonable. Look for value, and don’t overlook flaws. Give any warning signs their proper weight. If it’s meant to be, it’ll happen.
- Breathe. Okay, this is technically a 6th tip, but it’s an important one. Buying a home can be stressful in any economic state. Setting a plan and limit will do wonders for your stress levels. Breathing exercises work, too.
Your realtor, lender and inspectors are wonderful resources. Talk to them. Don’t be afraid to ask questions even if you’re a first-time homebuyer—on second thought, especially if you’re a first-time homebuyer.
Will the housing market cool off? Will it crash?
It’s possible the market could crash. But what’s more likely is a value correction. The economy is picking up steam. It’ll probably flatten or dip slightly in the near future. Reality will set in. Supply and demand will even out.
The thing to remember is that real estate has always been a good investment over time. If the house you’re looking at is in good shape and priced right, it will sell. It’s good to be cautious, but if you want or need to move, you can still do it now. Over time, odds are your home will appreciate and you’ll be out ahead.
If you do decide to move forward, first things first: home loans. Head over to our Home Loans page to see what yours could look like.