Pretty much the same conditions obtain across the country in most real estate markets right now: low inventory, high demand, rising prices, and near historically low interest rates. Bidding wars and competing all-cash offers are fairly common now. That’s a crazy combination, so it’s just not that easy to determine whether now is the right time to buy. And, really, the best time to buy a house is when it makes sense for you. So let’s see whether you should, considering this crazy Redlands real estate market, buy now or wait.
Overview of Redlands Real Estate Market Conditions
Determining whether you should buy or wait begins with an understanding of the current real estate market conditions. And here’s what you’ll find in the Redlands real estate market and in most others as well.
SUPPLY AND DEMAND IMBALANCE
Competition is fierce because there are far more people who want to buy homes than there are homes on the market. Supply is dwindling, and this has caused bidding wars and all-cash offers.
A result of this situation is that many buyers, out of a sense of desperation, are buying homes that don’t really meet their wants and needs. And this points up the critical need for the assistance of a local real estate agent – in order to avoid such a mistake engendered by low supply, high demand, and fierce competition. To discover more about how a Redlands can help you, just call (951) 232-9704.
INVESTORS MAKING IT WORSE
Owing in part to the low mortgage interest rates, investors are buying up homes across the country – which further depletes the already low inventory.
“The few houses available are selling quickly – and the buyers aren’t always hopeful first-time house hunters. Sometimes it’s a $50 billion private equity firm. Large-scale investors . . . have been snapping up homes across the country to rent out for a profit, beating out everyday Americans in bidding wars by offering cash and skipping due diligence. In other instances, it’s a company nabbing homes at below-market prices for cash, only to turn around and sell them for tens of thousands more weeks later.”
PRICES GOING UP
With inventory plummeting, home prices are soaring (which is basic supply and demand at work). It’s not at all uncommon for a home to sell above the asking price.
The upshot here is that even low mortgage rates are very low, the high home prices cancel out or negate that advantage.
How to Know You Should Buy Now
The Redlands real estate market isn’t as dismal as it may seem at this point. In fact, it’s a great time to buy for many people when the right pieces are in place. Below are the signs that you should buy now and not wait. You should buy when you have…
A STABLE INCOME
“It’s critical to feel financially secure before you buy a house. If you’ve had a steady stream of income for at least a few years, that’s a good sign you’re ready to take the leap toward homeownership. We are living in the middle of a pandemic, and with COVID-19, you want to make sure you have a stable job. Right now in the current times, that is huge.
“Lenders want to see a consistent history of employment to ensure you have enough money coming in to cover the cost of a mortgage. The majority of lenders ask for your last two years of W-2s, and some will even ask for pay stubs right up until closing.”
A HANDLE ON DEBT
“The next thing to take into account is your debt-to-income ratio (DTI) – a measure of how likely you are to be able to afford monthly mortgage payments, given your current debt and your monthly income.”
This DTI will take into account things like credit card debt, auto payments, and student loans – that is, your total monthly recurring debt divided by your monthly net income. Most lenders want a DTI equal to or below 43%, and lower is always better. If that’s where you are, then now is a good time to buy.
You should buy now only if you have enough money saved up to cover all the upfront expenses of buying a home, especially the down payment and closing costs.
“Depending on the type of mortgage you get, a down payment can be anywhere from 3.5% to 20% of the home’s purchase price. Closing costs usually make up an additional 2% to 5% of the home’s purchase price.” You can contact an agent at (951) 232-9704 to get a better understanding of these Redlands real estate market costs.
A GOOD CREDIT SCORE
A good credit score will get you better rates and terms on your mortgage. And you need an even better score now than you did a short time ago.
“Lenders use their own credit scoring models to determine how risky a borrower you are. Before the pandemic, good credit was considered to be the high 600s or low 700s . . . Now it’s moved up into the mid-700s and higher.” But if your score is in that range, now is likely a good time to buy.
GOALS THAT ALIGN WITH BUYING
If you’re ready to settle down and are committed to staying in one place for a long time, then you should buy now, even in this crazy Redlands real estate market, rather than waiting.”[I]t makes more financial sense to stay put for at least a few years after buying. It’s very hard – if not impossible – to make money on a home unless you plan to stay in it for a while.”
The Need for an Agent
So, should you buy now or wait in this current tough market for buyers? It all depends, of course, on your individual needs and goals and your financial situation. But if personal conditions are right, now can be a great time to buy. If you’re ready to buy and want to successfully navigate the Redlands real estate market, contact us today at (951) 232-9704.