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The housing market is hot right now – if you’re a seller.
In contrast, buyers are having a harder time finding homes.
Americans are aware of the difficulties they face when buying a home. More than 70% of US adults believe the housing market is currently in a bubble, and more than half think it’s a bad time to buy a home, according to a survey of more than 7,000 adults from Momentive. .
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Price is a major factor keeping potential buyers out – about 38% said they’ve delayed or canceled a home purchase plan due to inflation. People of color are also more likely to push through with home purchases due to rising costs, the survey found.
Jon Cohen, research director at Momentive, said: “More shuffled or delayed purchase plans in these groups risk exacerbating the large disparity in home ownership by percentage. race and ethnicity”.
In April, the median home sale price in the US was $391,200, up nearly 15% from a year earlier, according to data from the National Association of Realtors.
At the same time, mortgage rates are also on the rise, meaning people buying with loans will also pay more for them, said Danielle Hale, chief economist at Realtor.com.
According to Hale, that could hurt younger consumers as well as first-time buyers. It also means that home ownership as a path to wealth is now out of reach for many.
Peter Murray, a broker and principal at Murray & Co. The Real Estate in Frederick, Maryland, said: “It’s a very competitive market for those shopping to the fullest extent of their budget. “There was a lot of disappointment.”
Everyone is being squeezed
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According to Brian Copeland, a real estate broker in Nashville, Tennessee, before the pandemic, there was a simple profile that constituted an “A” buyer.
Copeland, who is also president of the Greater Nashville industry association, said: “Four years ago an ‘A’ buyer was someone who had pre-qualification for a loan, had a 3% drop and could be out this weekend and buy house. Agency. “Now, one buyer ‘A’ has all the cash.”
Additionally, today’s top buyers are willing to forgo appraisals and inspections and in some cases, not even see the home they’re buying in person, he said.
“Everybody is being squeezed,” Copeland said, adding that affordable housing for the middle class is “absolutely miserable.”
Payments
Some homeowners may be tempted to stretch their budget to buy a home, especially if they’ve had months of searching and are outbid.
According to Marguerita Cheng, a financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland, that can make sense in some cases.
“There are situations where I’ve told people it’s okay to stretch, but just understand the impact it will have on other areas of your life,” she says.
For example, you might pay a little more if moving will reduce other expenses or if you anticipate lifestyle changes that will free up space in your monthly budget. This could include going from two cars to one, or having kids going to public school soon, meaning you no longer have to pay a lot for babysitting.
If you’ve calculated your budget using your base salary, which doesn’t include any bonuses, you might as well be able to afford more, she says. And, if you don’t have consumer debt, save enough for retirement, and have a solid emergency fund, there may be more possibilities than you first think.
The length of time you are expected to stay indoors is also important. If you are looking to live in a house for more than 5 years, you should pay a little more now.
When does not last
On the other hand, there are some situations where it just doesn’t make sense to increase your home buying budget.
Cheng says stick with your original plan if paying more makes it difficult to contribute to other financial goals, such as saving for retirement or paying down debt.
“If the only way that stress happens is if they borrow from retirement, I would probably say that doesn’t make sense,” she said.
If the only way that extension would happen was if they borrowed from retirement, I would probably say that doesn’t make sense.
Marguerita Cheng
CEO of Blue Ocean Global Wealth
She also cautions against spending all of your savings on a more expensive home. You need to budget for variable expenses like taxes, insurance, and repairs.
It doesn’t make sense to stretch your budget to the point where you can only pay with a tax break, says Mr. Cheng. If those benefits are lost in the future, you’re in trouble.
What to do if you cannot pay more
Buyers who can’t stretch their budget have several options.
“They may have to pause their home search or they need to readjust their search criteria,” says Murray.
Stepping out of the buy market can make sense for some people who need more time to save. However, that can also be a bad idea — if prices continue to rise, you could be pushed out of the market, says Copeland.
That means it might make more sense to rethink your must-haves. That includes looking at different neighborhoods, including those that aren’t as well known or may be further from the city center. They may also need to be flexible about the size or condition of the home they buy.
They should also have all the paperwork ready so that when they see a home they like, they can make an offer right away, Hale says.
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Posts “When to increase a house budget and when to stick to an original price” posted by on 2022-07-05 21:25:30. Thank you for reading the article at Newsurf.info