Low mortgage rates and even lower inventory are fueling a competitive start to 2020. Daryl Fairweather offers advice for buyers in this seller’s market.
Read the Transcript:
Hi guys, Katy from Redfin here and I’m standing here with our chief economist Daryl Fairweather. Thanks for being here, thank you for having me.
We are going to talk about the housing market predictions what happened in January and why it looks like it’s going to be such a hot market for buyers this year.
So Daryl, what happened in January and what’s the housing market doing right now?
Buyers came back in January thanks to low mortgage interest rates. Mortgage interest rates are nearly a percentage point lower right now and they were this time last year which means if you’re a buyer, you can afford more house it’s really attractive to get out there make an offer and lock in a home. We’re seeing a lot of buyers coming out and doing just that.
So is it more than we expected at the end of last year? Is January bigger than we even thought it would be?
We’re hearing from our agents that January is like the new spring. Plenty of buyers are out there more than they would have expected for this time of year and so yeah, it’s been really busy very early in the year.
With this accelerated January being so hot, is that an indication that spring is going to be even hotter? Will it cool down in the spring at all or we’re on the on-ramp and we’re going?
I think that a lot of buyers are trying to get a jump on the spring market but there will still be more buyers who are going to wait until it’s the right time for them personally. We know when their kids are about to be out of school in the summer that’s usually when we see the most activity and I expect that to also be true this year.
So it’s just heating up quick and going to stay hot? (that’s right) I wish that’s what our summer was going to be like.
So let’s talk about what’s out there for buyers. Lots of buyers, are there a lot of homes on the market?
Because there are buyers who are snatching up homes there are actually fewer homes for sale right now that we’ve seen in two decades at least. But we do expect there to be more new listings coming on the market because builders are taking advantage of low interest rates too and are trying to build to meet the demand. But the last 10 years there hasn’t been enough new construction to meet demand. That’s true this year, it’s going to continue to be a problem. So there just aren’t enough homes out there for everyone who wants them. If you know you want a home it’s good to be aggressive and take charge.
Speaking to that, what can buyers do to really prepare to make sure they’re aggressive and make sure they’re able to take charge?
Buyers should set a budget, talk to their lender, get pre-approved. Figure out exactly how high they can go. If they do get into a bidding war and they have to escalate the price also figure out where the nice-to-haves and where the must-haves so that they can figure out which homes actually fit into their budget most perfectly and really give them everything that they want. Even though there aren’t as many options right now there are still homes out there and it’s good to just know going right in how much you’re willing to pay and what it is that you really want.
Awesome so it sounds like yes, it’s a competitive market but it’s competitive because there’s an advantage for buyers being those lower interest rates than we’ve seen in a really really long time.
Yeah, if you know what you’re doing if you have an agent advising you, you’ll be successful so just hang in there and know the market’s faster but you still have a good chance of getting a home. Got it, so having all your ducks in a row, making sure you’re pre-approved, and having an agent probably who can help you navigate those competitive situations and offer advice on contingencies and escalation clauses and all the intricacies of writing a competitive offer in this market. That’s right. Awesome.
My last question is what advice do you have for somebody who needs to sell and then buy right away?
There are some options available if you have RedfinNow available for example you can get a cash offer on the home that you own and have some flexibility as to when you move out which makes moving into the next home really convenient you have the cash to do it. If RedfinNow isn’t available there are other options. You can get a bridge loan for example you might want to sell your home and then rent a home in between so that you have some flexibility as to when exactly you can move out. There are options out there but it is a difficult thing to time the sale with buying a new home.
So it sounds like it’s going to be a crazy housing market this season and 2020 is going to be full of surprises. A competitive market, an exciting market for sellers. We will keep you informed here at Redfin, thank you so much for hanging out with me today and explaining what buyers can do to get ahead of the game and we will talk to you soon.
Sounds great. Alright, thanks guys!