What will you do with your Sundays now that the NFL season is about over? Maybe you’ll be hitting the open house circuit because, according to some real estate agents, Super Bowl weekend is the unofficial kick-off of peak home buying and selling season.
Even though it hardly feels like spring in many parts of the US, when home sales start ticking up in March and April, it’s a result of people starting to make their moves now.
So if you’re planning to be in the market this year, here’s what to expect this spring — and how to be ready to pounce.
Don’t wait for better prices or rates
Last year was the least affordable housing market since the 1980’s as mortgage rates spiked to 23-year highs at the end of October. Plus, a historically low inventory of homes kept prices near record highs, resulting in 1 million fewer homes sold last year than in 2022.
But a slightly brighter season is dawning this spring. Rates are inching lower, and more homes are beginning to hit the market. Already homeowner optimism has improved, hitting its highest level since March 2022 in January, according to a Fannie Mae survey of home purchase sentiment.
Mortgage rates are down from their highs of last fall and have been hovering around 6.6% since mid-December, reducing uncertainty and improving affordability for homebuyers. Plus, available home inventory increased slightly in January compared to a year ago, further helping home shoppers stymied by few homes coming to market.
This spring is offering a bit of rate and price stability said Betty Jans, an Annapolis, Maryland-based real estate agent. While they may not come down as much or as fast as buyers would like, they aren’t expected to stratospherically soar, either, she said.
“I encourage homebuyers to continue their process,” said Jans, who is an agent with Berkshire Hathaway HomeServices PenFed Realty. “At this point we don’t see the prices coming down much. Maybe small adjustments of a few thousand dollars here or there. And rates will come down, but not significantly. It will be a minor adjustment.”
So little movement is expected that it may not make sense to wait for rates or prices to improve further, she said.
“If you wait, and all of the sudden we have a little dip in rates, you’re going to be competing with everyone else that wants to buy then, too,” Jans said. “You may be better off making a decision now.”
Assemble your team
“You should already be very busy getting ready if you’re planning to buy this spring,” said Mike Mravca, a real estate agent with Taylor Properties who works in Virginia, Maryland, Delaware, and Washington, DC.
With inventory still about 35% below pre-pandemic levels nationally, according to Realtor.com, housing markets continue to be competitive.
Mravca advises his clients to put together a home-buying team will keep you ahead of the pack in a bidding war with other buyers where the seller wants two things 1) the most money for their home and 2) the most assured chances of getting paid and closing the deal.
You’ll want an agent who is calling you on Thursday to be sure you’re looking at new listings coming to market ahead of the weekend and helping you organize your weekend around showings and open houses. Many properties that sell quickly are already looking for offers and setting a deadline of Monday or Tuesday. A good agent can help you have all your ducks in a row to present a compelling offer, he said.
Everything matters in a competitive market, Mravca said.
“Your agent matters, your lender matters, your title company matters. It all matters,” he said. “If any of them are a weak link, it will create a problem. And you’ll be going up against buyers who have no weak links.”
Mravca recommends connecting with a direct local lender who is respected and known by local agents, who help sellers review offers.
“They are in the same time zone, they can process your loan faster, they know the area,” he said. “They should have a good reputation as a company that can reliably close a deal.”
Having a solid team lined up before you even get to falling in love with a house can make all the difference getting that house, he said.
“I’ve had clients beat all-cash offers or offers with higher down payments, simply because we came in more organized.”
Scout out support
First-time home buyers need the most preparation, said Hillary Nash, a real estate agent with Rlah Real Estate based in Washington, DC, who was also attending the NAR policy event.
“If you are looking to buy in 2024 the prep starts now,” she said.
When she works with first-time buyers, she begins by reviewing their credit profile with them and looking at what savings they have.
Typically first-time homebuyers in the past year put 6% down, according to NAR data. Many homebuyers expect that they need to come prepared to put down much more.
To make the nest egg you’ve saved go as far as possible, now is the time to explore any family gifts that might be coming in to help with a down payment or closing costs. Only a handful of buyers have access to gifts like that, so Nash also said she typically explores whether buyers qualify for any down payment assistance or homeowner support programs.
“There is a plethora of programs,” she said, and they aren’t always just for first time home buyers.
Washington, DC, and the Maryland and Virginia suburbs around the city, where she works, are higher-earning areas. But she said buyers might be pleasantly surprised at the maximum level of income that participants in these programs earn.
For example, she said, income eligibility for DC Open Doors, a down payment assistance program sponsored by the District of Columbia, caps a borrower’s income at $199,200. The program provides money for a down payment that the buyer pays back upon refinance or sale of the home.
“People might not think that they could qualify for something like that,” she said. “It’s always worth a look.”
Homeownership assistance programs take many different forms and are often operated by state or local governments. Down payment assistance programs – which might be a loan or grants that don’t have to be paid back at all – cover some or all of a homebuyer’s down payment and sometimes closing costs.
The Department of Housing and Urban Development offers links to homeownership assistance programs by state here.
Play to your advantage
A homebuyer’s purchase is typically driven by what they can afford in a monthly payment. A growing number of homeowners are cost burdened, which means they are paying over one third of their income toward housing.
As the cost of housing has increased, some homebuyers have rushed in to homes they are struggling to afford. There were 19.7 million homeowner households that were cost burdened in 2022, more than any other year since 2012 and up from 19 million in 2021.
Fortunately, housing affordability improved at the end of 2023 as mortgage rates declined. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $2,163 in the fourth quarter of 2023, down 1.2% from the third quarter, according to NAR. It was still up 10% or $196 from a year ago.
Head into a home search knowing what a conservative monthly payment threshold is for you agents say. Then you can move the variables of the “price,” “location” or “condition” of a house around to triangulate the best chances for you to buy a home.
The National Housing Conference offers a flexible calculator for would-be home buyers to assess how much of a mortgage they can afford, by monthly payment amount, without having to guess how big a down payment they will need.
If you’re willing to move farther out from the city center, you may be able to get a more sizable home in better condition for the same price as in your ideal neighborhood. And, if you’re willing to look at houses that have been lingering on the market or need a little (or a lot!) of updating, you could get a good price on a house in an ideal location.
At the same time, if you’re looking for a mint condition home in a prime location, you can expect to pay a premium and face some competition.