How long will this competitive sellers market actually last?
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We’ve been watching the Birmingham housing market for a while. Curious about how long this crazy sellers market will last, we reached out to two local experts: Richard Grimes, President and CEO of RealtySouth, and Jim Bryant, Mortgage Consultant with Prosperity Home Mortgage. Keep reading to find out what they said.
Bham Now: how long have we been in this sellers market + what prompted it?
Grimes: It’s been going on throughout 2020 and 2021, and a combination of things have caused it:
- Low interest rates.
- Exaggerated demand for houses with people working from home because of COVID and investing in both their primary residences and in second homes.
- Low supply.
Bryant: With Americans sitting in their houses for a year and a half, and with government stimulus money, many people have saved money.
Forbearances for student loan debt mean that some people haven’t paid this debt in a year and a half. In some cases, they haven’t paid mortgages or rent for about this same length of time. As a result, people are sitting on a massive amount of cash.
Because of that, people who in the past wouldn’t have considered buying a home feel that now’s the time to do it, and they’re entering the market. There’s a much higher demand than I’ve seen in 20 years of doing this.
If you’re thinking of buying a home now, Prosperity Home Mortgage can help.
Bham Now: how long do you think the sellers market will last and what indicators are you watching?
Grimes: If we look at the next 18 months, I don’t see a dramatic shift in interest rates, although they will likely go up some. I don’t see a shift in more available inventory.
So I think we’re in a similar market for the next 12 to 18 months at least. And we can’t predict further than that.
Bham Now: Both Grimes and Bryant cited a number of indicators they watch, to see what the market’s going to do:
Bham Now: let’s say someone does decide they’d like to buy right now. What advice do you have for them?
Grimes: If you have a house to sell, you can find a new home to live in. But you’ve got to be a more prepared purchaser.
A normal purchaser is going to get a mortgage—typically a 30-year mortgage—and we like to pre-qualify and pre-underwrite them for that. That way, they are competing head-to-head with a cash buyer, and their financing is done.
A good buyer’s agent is going to prepare the buyer financially before they even start looking for a house.
Bryant: Get your credit right. The higher your credit score, the better your mortgage rate. The better your rate, the lower your monthly payment. A lower monthly payment means more house for your money.
Next, let’s talk about down payment. There’s a misconception that you have to have 20% down to buy a home. There are a variety of zero-down programs in this state.
And, most Americans are able to buy their house with a down payment as low as 3%. On a $300,000 home, that works out at nine grand, which is roughly what the stimulus checks were for the average family last year.
If you have credit and a down payment, we can help you with the rest.
The important thing, if you’re looking to get a home, is to go to somebody you trust. I live right here in this community. My family goes to school here. We go to church here. With a local lender, you can literally reach out and touch them.
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