If you are looking to buy a home in 2023, you should watch this video to learn these 3 top things homebuyers should know.
If you are looking to buy a home in today’s adjusting market, many of you might think, does home value still appreciate today in the South Bay LA? Should I wait until the interest rates go down? What is the most crucial step before I even start shopping around?
Right now I am gonna go over 3 things you should know that will help you get a better idea what is going on in today’s adjusting market and be more confident and comfortable to start your buying journey.
Watch to the end so you won’t miss the most important step before you start taking any action.
#1 You should know this fact: Home value still appreciates in many cities in the South Bay.
You probably have heard people talking about the market slowing down. Well, what does it mean by “slowing down”? I want to encourage you to pay attention to what numbers they are referring to.
If they are talking about median days on market;
In 2021, the market was extremely hot. The rates were historically low around 3%, that’s why the demand was strong. When properties came on the market in South Bay area, in just 1 week, it’s gone. No doubt, it was challenging for most buyers to get their offers accepted in such a competitive market. But after the rates went up to 6% in June 2022, many buyers just cannot afford to buy anymore, so the demand softened. Those overpriced properties sit on the market for months, and no offer comes in. Right now the median days on market is 23 days. It absolutely takes longer to sell in 2022 compare to 2021.
If they are talking about how many offers do homes usully get?
In 2021, many properties would get 10 to 20 offers in a short period after they hit on the market. But in 2022, it doesn’t happen any more. But it doesn’t mean it won’t sell, if homes are priced properly, they still get 2 or 3 multiple offers. You can see, the market is still competitive because buyers are still interested in appealing and reasonably priced homes in South Bay.
If they are talking about the price going down? Be careful about this one.
Probably it’s just all those price reductions they see. The sellers have a tendency to price high in the beginning, because they really believe their homes have that value, and wanted to test the market. But once they noticed that the market is shifting, they don’t have any other choice but lower the price. The sold price might be lower than the original asking price, but The median sales price still went up by 1-5% in many cities in South Bay compare to 2021. Experts say that most likely home value will continue to appreciate in the next 5 years, it won’t be as crazy as 2021 but at a slower pace. Instead of looking at the market negatively, I want to encourage you to look at today’s market as a “rebalancing back into a normal market”.
#2 You should know this phrase: Marry the house, date the rates.
So, marry the house: there is more inventory on the market right now, and as a buyer, you finally have more options to choose from, if you find the right house for you, there is less competition, and it’s easier to negotiate with sellers, meaning there is a better chance for you to secure the house you like.
Date the rates: rates are NOT forever. They are always changing…If rates go up, you are going to be happy you locked in a lower rate. If rates go down, you can always refinance and lower your rate. For example, I purchased my home in 2016, and the rate was about 6%, in only six years, I had the opportunity to refinance twice to lower that rate. But if you wait, it could cost you thousands in lost home appreciation only waiting for rates to come down.
I am a firm believer that it is much more important to focus on *your* personal goals and circumstances, but not let the “slowing down market” or “rising interest rates” affect you too much when deciding to buy your next home.
#3 You should know this most important step Before you start shopping around: get pre-approved and know your numbers.
Getting pre-approved is not something you can do online, but you need to work with a lender. They will ask for your past 2 years’ tax return and run your credit and calculate your debt-to-income ratio to figure out how much of a loan you will qualify for, and then they will provide you a pre-approval letter. Without a pre-approval letter, the seller won’t even look at your offer. (Of course, if you are an all-cash buyer, you don’t need any pre-approval) Before you start shopping, it’s very important to know the highest purchase price you can afford, and the maximum number of monthly payments you feel comfortable with, or you might waste your time looking at something you can’t even afford. Also, when you are in the position to negotiate with the seller about the purchase price, knowing your highest price would be helpful to compete with other buyers.
So that touches on a few of my tips for getting you to understand today’s adjusting market.
Next you should watch my upcoming video about my 9 tips for searching homes strategically so you don’t waste your time but will be able to enjoy searching your dream home efficiently!