Why Is It So Difficult to Buy a Home Today?

WOULD-BE home buyers are having a hard summer as house prices have soared and properties are being snapped up in hours.

Demand for houses is at a peak and the supply of suitable properties hitting the market is low causing intense bidding wars.

While this is great for sellers, who are getting a premium price for their home and nearly instant sales, it is causing frustrations for those looking for a new house to call their home.

But what is causing the sudden boom in property prices? Several factors are coming together to create a perfect storm.

As we come out of lockdown and the economy is returning to a more normal state of affairs, many who would have moved last year but had to put their plans on hold due to the coronavirus are now reactivating their stalled plans.

Coupled with this, those who were uncertain of their job stability during the pandemic are feeling more confident at work as Ohio reopens and are willing to commit to a new mortgage.

And speaking of mortgages, interest rates remain at a historic low making the price of borrowing money as cheap as it has ever been in the history of the Federal Reserve.

But with inflation having jumped in the past couple of months, many are also concerned the days of near-zero interest rates may be coming to an end as inflation hawks at the Federal Reserve are showing concern at rising prices and may start pushing for higher rates to tackle rising inflation and bring it back to the set target of two percent.

All these factors – as well as the noted seasonal jump in home sales in the spring and early summer – have come together to push demand for homes to a high point, with anecdotal stories abounding of offers for properties sight unseen, offers well above asking price, owners receiving a dozen offers in a single day, offers with waivers for inspection reports and more.

Some market watchers are concerned there may be a housing price bubble occurring which could burst to leave new buyers deep underwater, but others say there is no sign of this happening.

The last market crash was 2008 but there is a key difference – back then lenders were being highly predatory in their practices and lending large amounts to people without the means to support the debt. Lenders today are both more conservative and bound by tighter regulations in how much they lend and to whom.

Many realtors expect to see the supply of new properties coming onto the market to increase over the second half of the year, especially as building projects stalled a year ago are now being completed, and their advice is it is still a good time to buy – just be patient and do not set your hearts on a specific house. Other tips if you can do so are to put in a bid with an escalation clause to help you in a bidding war, agree to buy properties as is, and be willing to compromise.