Some people believe there’s a group of homeowners who may be reluctant to sell their houses because they don’t want to lose the historically low mortgage rate they have on their current home. You may even have the same hesitation if you’re thinking about selling your house.
Data shows 51% of homeowners have a mortgage rate under 4% as of April this year. And while it’s true mortgage rates are higher than that right now, there are other non-financial factors to consider when it comes to making a move. In other words, your mortgage rate is important, but you may have other things going on in your life that make a move essential, regardless of where rates are today. As Jessica Lautz, Vice President of Demographics and Behavioral Insights at the National Association of Realtors (NAR), explains:
“Home sellers have historically moved when something in their lives changed – a new baby, a marriage, a divorce or a new job. . . .”
So, if you’re thinking about selling your house, it may help to explore the other reasons homeowners are choosing to make a move today. The 2022 Summer Sellers Survey by realtor.com asked recent home sellers why they decided to sell. The visual below breaks down how those homeowners responded:
As the visual shows, an appetite for different features or the fact that their current home could no longer meet their needs topped the list for recent sellers. Additionally, remote work and whether or not they need a home office or are tied to a specific physical office location also factored in, as did the desire to live close to their loved ones.
The realtor.com survey summarizes the findings like this:
“The primary reason homeowners decided to sell in the last year was the realization that, after so much time spent at home, they wanted different features and amenities, such as walkability, outdoor space, pool, etc. . . . ”
If you, like the homeowners they surveyed, find yourself wanting features, space, or amenities your current home just can’t provide, it may be time to consider listing your house for sale.
Even with today’s mortgage rates, your lifestyle needs may be enough to motivate you to make a change. The best way to find out what’s right for you is to partner with a trusted real estate professional who can provide expert guidance and advice throughout the process. They can help walk you through your options, so you can make a confident decision based on what matters most to you and your loved ones.
While the financial reasons for moving are important, there’s often far more to consider. Non-financial reasons can also be a significant motivating factor. If you need help weighing the pros and cons of selling your house, let’s connect today.
One of the biggest questions people are asking right now is: what’s happening with home prices? There are headlines about ongoing price appreciation, but at the same time, some sellers are reducing the price of their homes. That can feel confusing and makes it more difficult to get a clear picture.
Part of the challenge is that it can be hard to understand what experts are saying when the words they use sound similar. Let’s break down the differences among those terms to help clarify what’s actually happening today.
- Appreciation is when home prices increase.
- Depreciation is when home prices decrease.
- Deceleration is when home prices continue to appreciate, but at a slower or more moderate pace.
Experts agree that, nationally, what we’re seeing today is deceleration. That means home prices are appreciating, just not at the record-breaking pace they have over the past year. In 2021, data from CoreLogic tells us home prices appreciated by an average of 15% nationwide. And earlier this year, that appreciation was upward of 20%. This year, experts forecast home prices will appreciate at a decelerated pace of around 10 to 11%, on average.
The graph below uses the latest data from CoreLogic to help tell the story of how home prices are decelerating, but not depreciating so far this year.
As the green bars show, home prices appreciated between 19-20% year-over-year from January to March. But over the last few months, the pace of that appreciation has decelerated to 18%. This means price growth is still climbing compared to last year but at a slower rate.
As the Monthly Mortgage Monitor from Black Knight explains:
“Annual home price growth dropped by nearly two percentage points . . . – the greatest single-month slowdown on record since at least the early 1970s. . . While June’s slowdown was record-breaking, home price growth would need to decelerate at this pace for six more months to drive annual appreciation back to 5%, a rate more in line with long-run averages.”
Basically, this means, while moderating, home prices are still far above the norm, and we’d have to see a lot more deceleration to even fall in line with more typical rates of home price growth. That’s still not home price depreciation.
The big takeaway is home prices haven’t fallen or depreciated nationwide, they’re just decelerating or moderating. While some unique and overheated markets may see declines, nationally, home prices are forecast to appreciate. And when we look at the country as a whole, none of the experts project home prices will net depreciate or fall. They’re all projecting ongoing appreciation.
If you have questions about what’s happening with home prices in our local area, let’s connect.
If rising home prices leave you wondering if it makes more sense to rent or buy a home in today’s housing market, consider this. It’s not just home prices that have risen in recent years – rental prices have skyrocketed as well. As a recent article from realtor.com says:
“The median rent across the 50 largest US metropolitan areas reached $1,876 in June, a new record level for Realtor.com data for the 16th consecutive month.”
That means rising prices will likely impact your housing plans either way. But there are a few key differences that could make buying a home a more worthwhile option for you.
If You Need More Space, Buying a Home May Be More Affordable
What you may not realize is that, according to the latest data from realtor.com and the National Association of Realtors (NAR), it may actually be more affordable to buy than rent depending on how many bedrooms you need. The graph below uses the median rental payment and median mortgage payment across the country to show why.
As the graph conveys, if you need two or more bedrooms, it may actually be more affordable to buy a home even as prices rise. While this doesn’t take into consideration the interest deduction or other financial advantages that come with owning a home, it does help paint the picture that it may be more affordable to buy then rent for that unit size based on nationwide averages. So, if one of the factors motivating you to move is a desire for more space, this could be the added encouragement you need to consider homeownership.
Homeownership Also Provides Stability and a Chance To Grow Your Wealth
In addition to being more affordable depending on how many bedrooms you need, buying has two other key benefits: payment stability and equity.
When you buy a home, you lock in your monthly payment with your fixed-rate mortgage. And that’s especially important in today’s inflationary economy. With inflation, prices rise across the board for things like gas, groceries, and more. Locking in your housing payment, which is likely your largest monthly expense, can provide greater long-term stability and help shield you from those rising expenses moving forward. Renting doesn’t provide that same predictability. A recent article from CNET explains it like this:
“…if you buy a house and secure a fixed-rate mortgage, that means that no matter how much prices or interest rates go up, your fixed payment will stay the same every month. That’s an advantage over renting since there’s a good chance your landlord will raise your rent to counter inflationary pressures.”
Not to mention, when you buy, you have the chance to build equity, which in turn grows your net worth. It works like this. As you pay down your home loan over time and as home values continue to appreciate, so does your equity. And that equity can make it easier to fuel a move into a future home if you decide you need a bigger home later on. Again, the CNET article mentioned above helps explain:
“Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home that you can tap into later on. When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.”
If you’re trying to decide whether to keep renting or buy a home, let’s connect to explore your options. With home equity and a shield against inflation on the line, it may make more sense to buy a home if you’re able to.
If you’ve been thinking about buying a home, you likely have one question on the top of your mind: should I buy right now, or should I wait? While no one can answer that question for you, here’s some information that could help you make your decision.
The Future of Home Price Appreciation
Each quarter, Pulsenomics surveys a national panel of over 100 economists, real estate experts, and investment and market strategists to compile projections for the future of home price appreciation. The output is the Home Price Expectation Survey. In the latest release, it forecasts home prices will continue appreciating over the next five years (see graph below):
As the graph shows, the rate of appreciation will moderate over the next few years as the market shifts away from the unsustainable pace it saw during the pandemic. After this year, experts project home price appreciation will continue, but at levels that are more typical for the market. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“People should not anticipate another double-digit price appreciation. Those days are over. . . . We may return to more normal price appreciation of 4%, 5% a year.”
For you, that ongoing appreciation should give you peace of mind your investment in homeownership is worthwhile because you’re buying an asset that’s projected to grow in value in the years ahead.
What Does That Mean for You?
To give you an idea of how this could impact your net worth, here’s how a typical home could grow in value over the next few years using the expert price appreciation projections from the Pulsenomics survey mentioned above (see graph below):
As the graph conveys, even at a more typical pace of appreciation, you still stand to make significant equity gains as your home grows in value. That’s what’s at stake if you delay your plans.
If you’re ready to become a homeowner, know that buying today can set you up for long-term success as your asset’s value (and your own net worth) is projected to grow with the ongoing home price appreciation. Let’s connect to begin your homebuying process today.
Shopping for a mortgage, you might encounter lenders who pre-qualify you for a higher loan amount than you expected. Many lenders work with standard debt-to-income ratio calculations which don’t take into account other costs of home ownership. If you take the highest loan amount, you risk maxing out your available funds and becoming “house poor,” without liquidity. Here are four steps to follow when deciding how much you should spend on a house.
Step 1: Understand what percentage of your income should go toward your mortgage
Take a good look at your monthly income and expenses. This will help you understand how much you can spend on a house. Keep in mind that you’ll need to account for taxes, insurance, repairs and renovations, along with increased utility expenses. That sounds like a lot, but remember that some are upfront costs, some are recurring, and other costs only happen once in a while. The first step is understanding how much you can afford to spend on a mortgage.
Determine your debt to income ratio (DTI). One of the first financial factors a lender will review is your DTI. To determine your DTI, take the total amount you pay in recurring monthly debt and divide that by your gross monthly income before taxes (not your take-home pay). This number is the percentage of income required to make debt payments each month. Be sure to include income and debt for everyone on the loan application. If your spouse, partner, or roommate is a party on the mortgage loan, their gross income and recurring debts also play a factor. Recurring debt can include:
- Student loans
- Car loans
- Credit cards
- Bank or department store credit card
- Personal line of credit with a bank or other financial institution
- Personal loans from any source
- Child support or alimony payment
Use the 28/36 rule to determine what you can afford. According to this rule, also used by lenders, most people can afford to spend as much as 28% of their gross monthly income on a mortgage and up to 36% on debt payments and still manage other typical recurring expenses. Some lenders may approve you for a mortgage if your finances fall outside this ratio, but they will likely charge extra fees and a higher interest rate to cover the increased risk, making your mortgage more costly.
What’s a “comfortable” mortgage payment vs. an “aggressive” one? Lenders rely on industry benchmarks and historical data to determine that a 25-33% DTI will allow borrowers to “comfortably” pay their mortgage and still save consistently for retirement, college, or a home repair fund. At the other end of the spectrum, lenders may still offer a loan to a borrower with a DTI between 33-40%. This DTI range becomes “aggressive” for lenders and puts them at higher risk. And it’s not much better for borrowers at this range. With a DTI of 33-40%, you would need to keep a close eye on all of your expenses at all times. It could be challenging for a borrower with a DTI between 43-50% to get a mortgage. At 50%, you’d be better off paying down your debt to improve your DTI.
With a DTI under 33%, you’ll qualify for better terms and interest rates because you represent a low risk of default. The better your DTI, the more confident lenders will be that you’ll stay on track with your payments and pay back the mortgage. As your DTI approaches the 50% rate, you’ll see less favorable interest rates and terms to cover the potential risk to the lender.
Step 2: Know all your costs when buying a house
It’s not all about your home’s purchase price. To secure a loan, most lenders require some amount of downpayment. To finalize the purchase and paperwork, you will pay additional closing costs. Below are the common costs of buying a house.
Your down payment is your “skin in the game.” It commits you to the mortgage with a significant upfront investment. Among the various loans available, you can find down payment requirements ranging from 3-20% of the home’s purchase price. Most experts recommend that you put as much money as you can into your down payment. Most conventional loans require 20% as a down payment, however, sometimes it’s simply not possible to save up a 20% downpayment. To work with a down payment less than 20%, you’ll need to qualify for an FHA, VA, or USDA loan.
A downpayment of 20% has two key benefits:
- Your total loan will be for a lower amount, so you will owe less in both principal and interest, resulting in a lower monthly mortgage payment. Because you’ve put a significant amount of money down against the worth of the home, you could be saving tens of thousands of dollars in interest payments. As you ask yourself how much to spend on a house, be sure to factor in your down payment. .
- When you put 20% down, you don’t pay for private mortgage insurance (PMI). Lenders require PMI to safeguard them if you default on the loan. Typically, once you have repaid 20% of your loan, you can ask the lender to remove the PMI payment. If you start with 20%, you avoid this extra payment altogether.
Remember to factor in closing costs. These fees cover the title company’s work to ensure you have a clear title. If the seller has unpaid debts (outside his or her mortgage) attached to the house, these liabilities could hold up the sale of the home. Closing costs also cover the fees for appraisals, title insurance, attorney fees, and fees charged by the county to record the property transfer from the seller to the buyer. Expect to pay between 3-6% of the home’s total purchase price for closing costs. For example, purchasing a $200,000 home, you can expect to pay somewhere in the range of $6,000–$12,000 in closing costs.
Step 3: Project the costs of owning a home
What does it cost to own and maintain a home? Your mortgage payment is the largest ongoing cost of homeownership. With most 30-year or 15-year conventional loans, homeowners will have a fixed-rate mortgage. This means a fixed monthly payment for the term of the loan. That amount will not change unless you refinance your terms with the lender. A longer mortgage term will often result in a lower monthly payment, and it will take longer to repay. A shorter mortgage term will involve a higher monthly payment and the home will be paid off sooner.
For renters becoming homeowners, utility bills could bring sticker shock. As a homeowner, you can expect your utility bill to be almost four times higher than what you paid as a renter. Some renters even pay the landlord a flat fee for gas, electricity, sewer, and water. If you rent a house already, you may not see this as big of a change. As a homeowner, you pay for each service based on usage. For example, your water usage goes up when you take care of a lawn or garden.
Homeowners need to pay property taxes and insurance. County property taxes commonly cover funding for local government, public schools, roads, emergency services, and libraries. Depending on where you live, your property tax rate will vary. You can look up property tax by county to include in your estimated homeownership costs.
Private Mortgage Insurance (PMI) pays the lender if you default on your mortgage. It applies to buyers whose down payment is less than 20%. You can typically expect your PMI payment to be between 0.5 – 1% of your loan amount per year. For example, on a $200,000 mortgage, your PMI payment would be $1,000 – $2,000 per year, or $83- $163 per month in addition to your mortgage.
If you live in a community with a homeowners association (HOA), you will need to pay a monthly fee to the association. These fees typically cover property maintenance, amenities, and security. HOA fees range between $100-$1,000+ depending on the type of property and its location.
Your home will need repairs and renovations over time so you may want a home maintenance savings fund. A good rule of thumb is to save 1-4% of your home’s value for yearly maintenance and home improvements. Such as, for a $200,000 home, the homeowner should save between $2,000-$8,000 a year for maintenance or significant home improvements.
Step 4: How much should you spend on a house? Calculate the “right” amount
A home affordability calculator estimates how much home you can afford. Four main factors are taken into consideration:
- Where you live
- Your annual income
- The amount you’ll apply as a down payment
- Monthly recurring debts and spending
Use the how much house can I afford calculator to get a sense of the right amount. To determine how much mortgage you can afford to pay each month, start by looking at how much you earn each year before taxes. Consider all your earnings for the year, which could include salary, wages, tips, commission, etc.
Suppose you have a spouse or a partner with an income that will also contribute to the monthly mortgage. Make sure to include that in your gross annual income for your household. Then take your annual income and divide it by 12 to determine your monthly income.
Here are some examples of a comfortable or aggressive purchase price based on different incomes, debts, and down payment amounts.. These examples are not location-specific. Visit the home affordability calculator where you can enter income, debt, location, and come up with a down payment that reflects your situation. Keep in mind you may need to pay PMI if your down payment is less than 20% of the purchase price, this will add an extra $83-$163 to your monthly mortgage payment. The examples below use a 4% interest rate for the estimated mortgage payment.
Make sure you take some time to understand all costs associated with homeownership – and how they affect one another. Examine your DTI to determine if you can afford a loan at a good rate or be better served by paying off debt first. Then estimate your monthly mortgage payment along with other recurring costs to see how much you should be spending on a house.
Are you thinking about selling your current home? If so, the biggest question on your mind may be: if I sell now, where will I go? If this resonates with you, there’s something you should know. The number of homes coming onto the market is increasing and that could make it easier for you to move up this summer.
According to the latest data from realtor.com, the number of homes being listed for sale, known as new listings, has increased consistently this year (see graph below):
While this news has clear benefits for buyers who are craving more options for their home search, what does that mean for current homeowners like you? It gives you two distinct opportunities in today’s housing market.
Opportunity #1: Take Advantage of More Options for Your Move Up
If your current house no longer meets your needs or lacks the space and features you want, this gives you even more opportunity to sell and move up into the home of your dreams. As more options come to market, you’ll have more to choose from when you search for your next home.
Partnering with a local real estate professional can help make sure you see these listings as soon as they come onto the market. And when you do find the one, that professional can advise you on how to write a winning offer to seal the deal.
Opportunity #2: Sell Before You Have More Competition
Just know that, in order to make sure your house shines above the rest, it may make sense to put your home up for sale before your neighbors do the same, creating more competition in your area. The increase in the number of homes being listed for sale is expected to continue, and a recent study from realtor.com says two-thirds of homeowners looking to sell say they’ll do so by August.
A real estate professional can advise you on what you need to tackle to get your house ready to list so they can put that for sale sign up in your yard sooner rather than later. That’s because the process of getting a home ready to sell isn’t taking as long as you may think. As a result, you can capitalize on today’s sellers’ market and get ahead of the competition.
If you’re a current homeowner looking to sell, let’s connect to begin the process. You have a unique opportunity to benefit from the additional homes being listed today and sell before your house has more competition.
There are signs that the housing market is easing off the record-high prices it’s seen during the past few years, but bidding wars for homes are far from over—especially in competitive markets. And the difference between landing your dream home and going back to square one can come down to something as silly as minor misunderstandings or misinterpretations of real estate lingo.
Take, for example, the subtle difference between the terms “highest and best” and “best and final,” which are used to describe the types of offers a buyer makes on a house. Many home sellers are asking buyers to submit one of the two types of offers in anticipation of—or amid—a bidding war.
Are you sure you know the difference between these two types of offers? Read on for the definition—and for savvy tactics from real estate experts—so you can put your best foot forward and land the home you have your heart set on.
What does ‘highest and best’ offer mean?
When sellers ask for a buyer’s “highest and best” offer, they’re typically trying to spark a bidding war and plan to play potential buyers off one another.
“When I see a seller asking for ‘highest and best,’ I read that as code for the seller wanting a firm final number for price and great terms,” says Melissa Dorman, a real estate broker with Living Room Realty in Portland, OR.
It often also entails accepting a home as is, which leaves little wiggle room for negotiations after an offer is accepted.
What does ‘best and final’ offer mean?
A request for a buyer’s “best and final” offer means the seller wants to move fast and is not interested in prolonged negotiations.
“When I see a seller asking for ‘best and final,’ it means they are not planning on pitting buyers against each other,” Dorman says. “They want to give everyone an equal shot and end—or avoid—the bidding war.”
Strategies for a ‘highest and best’ offer
Winning a bid amid stiff competition—without regrets later—is no easy task, but it can be accomplished with a firm plan in place.
“Buyers should ask their agent to garner as much detail as possible about the offers already received during ‘highest and best’ negotiations,” says Ian Katz, a licensed real estate broker with Compass in New York City. “They should find out what the seller deems most important in a winning offer aside from price. It’s always smart for a buyer’s agent to find out what will get the deal done in these situations.”
For example, will the seller be requiring a rent-back agreement after closing, meaning that the buyer won’t be able to move into the house right away? Or is the seller eager to unload the home and looking for a buyer who’s able to make an offer with a quick closing of 30 days or less?
Gregg Cantor, president of homebuilding and remodeling company Murray Lampert Design in San Diego, insists that “cash is king” and can often seal the deal, even if other offers are slightly higher.
If cash isn’t an option, he recommends including a pre-approval letter from a bank—and staying relentlessly upbeat.
“Don’t bring up any issue about the home before the offer is accepted,” Cantor advises.
Strategies for a ‘best and final’ offer
For “best and final” bids, Glen Henderson, a broker associate at Premier Homes Coronado in San Diego, recommends using an escalation clause.
An escalation clause is when buyers offer a range of prices and say they will beat any other competing number by, for example, $5,000.
“You can outline how much you’re willing to pay over the highest offer,” Henderson says. “If you have a cap you don’t want to exceed, you can say you agree to pay $5,000 above the highest verified offer, not to exceed whatever your upper limit is.”
Kelly Edwards, a real estate agent at Compass in Los Angeles, says one strategy she’s seen work again and again is simply “having an offer stand out.”
“Instead of offering $470,000, why not offer $470,427,” Edwards says. “It can really help you stand out.”
Edwards also recommends other more mainstream—and usually successful—tactics, including paying closing costs, waiving certain contingencies, forgoing inspections, and “asking to be put in first position” (essentially, putting yourself on the seller’s waitlist) in case their accepted offer doesn’t work out.
In the end, buying a house—even one you feel emotionally tied to—is a business decision for both parties. Put your best foot forward, be prepared, and, if the first few homes don’t work out, try not to take it personally.
Even if you haven’t been following real estate news, you’ve likely heard about the current sellers’ market. That’s because there’s a lot of talk about how strong market conditions are for people who want to sell their houses. But if you’re thinking about listing your house, you probably want to know: what does being in a sellers’ market really mean?
What Is a Sellers’ Market?
The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows housing supply is still very low. There’s a 2-month supply of homes at the current sales pace.
Historically, a 6-month supply is necessary for a normal or neutral market where there are enough homes available for active buyers. That puts today deep in sellers’ market territory (see graph below):
What Does This Mean for You When You Sell?
When the supply of houses for sale is as low as it is right now, it’s much harder for buyers to find homes to purchase. That creates increased competition among purchasers which can lead to more bidding wars. And if buyers know they may be entering a bidding war, they’re going to do their best to submit a very attractive offer upfront. This could drive the final price of your house up.
And because mortgage rates and home prices are climbing, serious buyers are motivated to make their purchase soon, before those two things rise further. That means, if you put your house on the market while supply is still low, it will likely get a lot of attention from competitive buyers.
The current real estate market has incredible opportunities for homeowners looking to make a move. Listing your house this season means you’ll be in front of serious buyers who are ready to buy. Let’s connect so you can jumpstart the selling process.
There’s never been a truer statement regarding forecasting mortgage rates than the one offered last year by Mark Fleming, Chief Economist at First American:
“You know, the fallacy of economic forecasting is: Don’t ever try and forecast interest rates and or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”
Coming into this year, most experts projected mortgage rates would gradually increase and end 2022 in the high three-percent range. It’s only April, and rates have already blown past those numbers. Freddie Mac announced last week that the 30-year fixed-rate mortgage is already at 4.72%.
Danielle Hale, Chief Economist at realtor.com, tweeted on March 31:
“Continuing on the recent trajectory, would have mortgage rates hitting 5% within a matter of weeks. . . .”
Just five days later, on April 5, the Mortgage News Daily quoted a rate of 5.02%.
No one knows how swiftly mortgage rates will rise moving forward. However, at least to this point, they haven’t significantly impacted purchaser demand. Ali Wolf, Chief Economist at Zonda, explains:
“Mortgage rates jumped much quicker and much higher than even the most aggressive forecasts called for at the end of last year, and yet housing demand appears to be holding steady.”
Through February, home prices, the number of showings, and the number of homes receiving multiple offers all saw a substantial increase. However, much of the spike in mortgage rates occurred in March. We will not know the true impact of the increase in mortgage rates until the March housing numbers become available in early May.
Rick Sharga, EVP of Market Intelligence at ATTOM Data, recently put rising rates into context:
“Historically low mortgage rates and higher wages helped offset rising home prices over the past few years, but as home prices continue to soar and interest rates approach five percent on a 30-year fixed rate loan, more consumers are going to struggle to find a property they can comfortably afford.”
While no one knows exactly where rates are headed, experts do think they’ll continue to rise in the months ahead. In the meantime, if you’re looking to buy a home, know that rising rates do have an impact. As rates rise, it’ll cost you more when you purchase a house. If you’re ready to buy, it may make sense to do so sooner rather than later.
Mark Fleming got it right. Forecasting mortgage rates is an impossible task. However, it’s probably safe to assume the days of attaining a 3% mortgage rate are over. The question is whether that will soon be true for 4% rates as well.
Purchasing a place to live is one of the biggest decisions of your life. Even in an ideal scenario — a buyers market with plenty of affordable houses and scant competition — the stress of buying a home is not something to take lightly. And today’s buyers are not living that ideal: Prices remain high, inventory cannot satisfy demand, and competition for the few homes available often leads to bidding wars (fortunately, there are some effective ways to prepare for that). Add to all of this rising interest rates, and it’s a potentially intimidating time for homebuyers.
To better understand how to prepare emotionally for what can be a marathon search, we spoke with Christina Koepp, a licensed mental health counselor at Wellspring Family Services, and asked her to weigh in on what home shoppers can do to cope with this pressure-cooker of stress.
What makes buying a home so stressful?
Buying a home can invite pressure from every direction. Let’s look at just a few of the potential stressors.
Choosing a home
A home purchase is one of the most significant financial decisions many people make in their lifetime, and on top of that, the process affects basic necessities like shelter and safety.
“Buying a home taps into all parts of our mind: our basic need for shelter, our attachment needs for a safe place to connect with ourselves and others,” says Koepp. “To take the risk and make an offer on a home, we need to be willing to attach to a new place to live, and — simultaneously — hold it loosely enough that it won’t be devastating to lose the bid. It’s a narrow path of guarded optimism.”
The real estate market
Just about anywhere you look in the U.S. these days, you’ll find a sellers market. This can make the stress of buying a house feel even more pronounced. A sellers market can bring anxiety accelerators like seemingly endless open houses, bidding wars, and getting outbid by all-cash buyers.
The loan approval process
If you’re working with a lender, the process can take weeks or longer. Expect lots of paperwork, which can be all the more grueling if your dream home is waiting. (To ease some of this tension, get pre-qualified before you find a place you want.)
Working with an agent who’s not a fit
Almost one in five buyers (18%) report that it’s “difficult or very difficult” to find the right real estate agent. If your agent isn’t a good fit, they can add pressure where they should be alleviating it.
Read on for tactics on how to navigate what can be both a stressful and exciting journey.
How can I mentally prepare for the stress of buying a house?
“If you ‘fall in love’ with every home you see, it leaves little room for discerning which is the best fit,” Koepp says. “And you can quickly become emotionally fatigued with each lost bid or opportunity.”
Instead, it can be helpful to think of your home buying journey as a balancing act between vulnerability and healthy detachment. In other words, try to be “vulnerable enough to imagine your life in this potential new place,” says Koepp, while simultaneously employing “the very healthy protective impulse of avoiding getting attached too fully and too quickly.”
Some more tips:
Think about your hopes and preferences in general terms
With each new home, ask yourself how you’ll feel if you don’t get it, says Koepp. When you encounter a loss, talk about it with someone. Discuss what excited you about the home, then carry that forward in your search. In short, keep an open mind as you search for your dream home.
Avoid all-or-nothing thinking by considering your preferences in a general sense — an updated home, an architectural style, a set of neighborhood characteristics, etcetera. This can remind you that there’s more than one place to find joy and contentment.
Identify your non-negotiables as clearly as possible
The way to balance being general with your wants is to be as clear as possible with your deal-breakers. “Know before you look if you’re really only open to a condo with three or more bedrooms, or a house with a garage,” says Koepp. “It’s easy to be swept up in a home that may have some dream elements, even though it has deal-breaker issues.”
Above all, Koepp says, offer yourself the grace that this won’t always be a neat and tidy process. “You get to be human in the midst of it.”
Find the right agent to help you cope with the stress of buying a house
Your agent is your guide through an often complicated journey. Make sure they provide peace of mind and not the opposite. If your agent is doing something that makes you uncomfortable, communicate it to them. Further, clearly articulating your wants, preferences, and non-negotiables will help your agent get aligned. This can ease your mind and allow you to focus on what’s important. If it’s still just not a fit, consider looking for a new agent.
Tips for easing the stress of buying a house in the current housing market
Manage your expectations
“Prepare for a marathon, even if it’s just a sprint,” says Koepp. You don’t know how long it will take to have an offer accepted. “It could be a couple homes you offer on; it could be 12.” Keeping your expectations flexible helps avoid disappointment.
Extend kindness to yourself
Koepp says this part can be challenging for some people. “It can be easy to doubt your judgment, become angry with your home-buying partner, or get obsessed with searching,” she says. “All these responses are understandable! Being kind means finding ways to rest, recharge and integrate each step along the way.”
A few things to try: Take a short break from scrolling through listings to re-center yourself, prepare a comforting meal after a lost opportunity, or be intentional about regularly getting to bed earlier, if you can.
Talk about your home buying stress with someone you trust
It’s helpful for many people to simply “say out loud what’s rolling around in their mind,” says Koepp. “Some prefer to journal. Use whatever works for you; try to share the challenges, insights, dreams and goals that you’re noticing. Reach out often to loved ones to keep your awareness, energy, and perspective in line with your goals and hopes.” This will help you process as you go.
How to bounce back after an unsuccessful offer
First, pause to reflect, then let it go
Koepp says it’s important to honor the deep disappointment that can result from a lost opportunity you felt invested in. “Take a few hours or even a couple days to acknowledge that experience, and know it will fade.” Next, find a way to feel gratitude. This may help counter the propensity to dwell solely on what was lost.