Low inventory continues to affect the Washington region and many housing markets nationwide.
In February, there were 13.4 percent fewer homes for sale in the multiple listing service (MLS), compared with February 2017. On the good news front, listing inventory has climbed 5.5 percent, compared with January 2018 — totally normal for a spring market.
The drop in the number of homes for sale compared with last year is even more dramatic when you realize this is the 22nd consecutive month of declines in year-over-year inventory. People just aren’t moving up or out as frequently as they did in the past.
While a few buyers have opted out of looking for a home in these conditions and have decided to keep renting for now, plenty of buyers are successfully finding the right home. Persistence and patience work for many buyers, but there are other ways to handle a market with a limited number of properties for sale.
Here are seven tips for finding your dream home in a market with low inventory:
- Work with a professional: This is no time to try to go it alone. Real estate professionals know which properties they are about to list, and if they’ve got their finger on the pulse of the market, they often have access to early information about other agents’ listings before they hit the Internet.
- Ask your agent to proactively look for potential sellers: If you’re interested in a specific neighborhood, development or condo community, your agent has access to tax records and can send letters to all the homeowners in the area to see if any are interested in selling.
- Switch neighborhoods: Not all neighborhoods have the same turnover rate. Some churn faster than others. Expanding your search even by a few blocks could garner properties that meet your needs even if they aren’t in your first choice of neighborhood.
- Switch property types: Being open to townhouses and duplexes as well as single-family homes can give you more opportunities to find a place. Or maybe look at condos as well as townhouses. Don’t rule anything out until you’ve seen inside, and not just looked at photos on the Internet. You need to physically tour homes for sale with your agent.
- Look at new construction: Newly built houses tend to be more expensive than resale properties. If you are willing to wait while the house is built, you could get exactly what you want. New construction offers other perks, too, such as the latest design trends, energy efficiency and fewer maintenance needs in the early years.
- Look for a fixer–upper or a teardown: Most buyers want a move-in-ready home, which means competition can be fierce for properties in pristine condition. If you’re willing to put in extra work yourself or pay a contractor, a fixer-upper could be easier to buy. Sometimes the fixing required is purely cosmetic, but buyers today are demanding. Lower your standards just a little, and you may find a diamond in the rough. Teardowns face more competition from developers, but it can be worth looking for a place in the neighborhood you want if you have the time and money to invest in building a new home.
- Adjust your budget: While you don’t want to spend above your means, expanding your hard-line budget by $10,000 adds less than $50 to your monthly housing costs if you choose a 30-year mortgage. Alternatively, you could search for properties in a lower price range with the intention of upgrading the house or building an addition in the future.
No matter which of these techniques you try, buyers this spring need to be 100 percent financially ready to make a solid offer when they find a house they want. Getting a fully documented preapproval for a loan — not just a pre-qual letter — is essential before your search begins. Happy hunting.
Jon Coile, chairman of Rockville-based multiple-listing service Bright MLS (formerly MRIS) and president of Champion Realty in Annapolis, Md., writes occasional commentary on the Washington-area housing market.