Meghan Duplechain of The Miles Real Estate Group is chatting all things real estate with us. Meghan is an amazing resource for you! She is a South Austin mom of two and is willing and able to answer any and all questions you may have about real estate.
Let’s chat about the real estate market and how best to empower yourself in it.
If you are alive and own a television or phone, then you have probably been inundated with clips, tips, and blips about the Austin real estate market and how HOT it’s been over the last two years. You’ve most likely heard the Fed has raised interest rates in order to calm inflation and help cool rising home prices. The feedback I’m getting from buyers is fear and uncertainty. So, let’s talk about your concerns, put them into context, and answer questions you have about the market and the home buying process. Below you will find my response to some common questions I get from buyers, specifically first time buyers, who are understandably weary of making the LARGEST purchase of their life when they feel less than confident in the market.
Are we in a housing bubble?
No, most experts would say we are not in a housing bubble in Austin. The current conditions are very different from what we witnessed in 2007 and 2008. During that time, subprime mortgages were being handed out like candy in a candy store and we had a large quantity of people placed in loans they could not afford. The lending process has been tightened significantly since that time. Inventory continues to chase demand, especially in Austin with such a strong economy and jobs market, and as long as that happens, we will not see a real estate ‘crash’. In fact, we will likely see home prices continue to rise, just at a healthier pace.
A recession could be on the horizon, is now a bad time to buy a house?
When we’re talking about real estate, a recession is not necessarily a bad thing. Contrary to what you might assume, home prices often rise during a recession. They may appreciate slower than we have seen (which is a good thing for buyers trying to purchase) but they will continue to go up. Now is actually a good time to buy. Competition has slowed and buyers are getting some of the power back.
Interest rates are so high, shouldn’t I wait for them to come down?
Interest rates will fall again at some point but by then home prices will have risen, so really you aren’t doing yourself any favors by continuing to ‘wait out the market’. There are creative solutions to high interest rates and the right lender can offer you advice on your options. You can also refinance once they drop so you are not stuck with these rates forever.
Okay, so now you want to buy a house, right?
Familiarize yourself with the process and the terminology. Below is a list of first steps to get you started on the right foot.
• Find a good Realtor. They don’t have to have the highest sales or the fanciest car but they do need to know what they are talking about and be confident negotiators and strong communicators. You also want to jive with them on some level, right? You will be spending a lot of time together so pick someone that makes the process enjoyable for you.
• Find a lender and get pre-qualified or pre-approved. These are often used interchangeably but they are in fact different. A pre-qualification letter lets the seller know that you have been vetted to a point where a lender is confident enough to say you are qualified to borrow up to a certain amount. Being pre-approved tells the seller that you are approved for that loan and strengthens your position in a multiple offer situation.
• Understand your financial situation. Be open with your Realtor and communicate with them how much cash you have available to use for your purchase. Knowing this information allows them to better guide you through the process. I tell people this all the time…as a Realtor I am not here to judge you, I am here to help you! I don’t care if you have $200 in your bank account or $2M, except for the fact that the information allows me to best assist you in achieving your goals.
• Familiarize yourself with a contract. Things move quickly in this market but a good Realtor will find the time to explain all of this to you.
• Know how much cash you want to put down (it does not have to be 20% by the way) and how that affects your payment and offer.
• Understand what an option period and option fee are. Know the difference between option fee and earnest money.
• Make a point to fully understand what an appraisal is and what signing an appraisal waiver means for you as a buyer. Also familiarize yourself with what a partial appraisal waiver is, the difference is important.
• Know what a title policy and a survey are and who pays for those.
• Understand now how much cash you have to bring to the closing table. Don’t be surprised down the road because there is a lot at risk. Work with a lender that is willing to calculate this for you before you get under contract.
• Never be afraid to ask questions. Knowledge is power.
Oh, and have fun! It can be stressful but I promise, you will be so happy you made the decision to buy. Home ownership is rewarding, both personally and financially, and I love helping people achieve this goal! Call me anytime, I am here to empower you.