If you stuck your toe in the housing market last spring and ended up deciding to wait, and plan to try again this spring, there's something you should know.
In its blog, real estate marketplace Trulia says this spring's housing market is different from last spring's in several different ways -- none of them particularly helpful to buyers.
The first challenge is the inventory level. While it is true that not all housing markets are the same, the number of homes for sale in most markets is significantly lower than last year.
“The Trulia Inventory and Price Watch found that housing inventory hit its lowest level on record, having fallen by 5.1% from a year ago,” said Trulia Senior Economist Cheryl Young.
Trulia says there are more homes for sale in the "move-up" category, but first-time buyers and looking for starter homes are having trouble.
Homes are selling fast
Because there are fewer homes for sale, sellers can ask more for them and get it. Buyers have learned that to get the home they want, they have to move fast. As a result, homes that are priced right don't linger on the market.
The experts at Trulia say buyers need to be prepared to act quickly when they find a house they like. Oh yeah, be prepared to pay asking price or more. In competitive housing markets, desirable homes often go for more than the asking price.
Another difference between last spring and this spring is the interest rate environment. Since December, the Federal Reserve has hiked the Federal Funds Rate twice, and mortgage rates have started to edge higher.
Rates are still very low in historical terms, but at today's prices an extra half-point could mean the difference between a mortgage payment that's affordable and one that's not.
Another difference is the competition. This year, there's a lot more of it. A big reason is the rise in consumer confidence.
With more consumers feeling confident about the economy and their place in it, they are more willing to think about a home purchase. That means there could be multiple offers on any house that strikes your fancy.
For that reason, Trulia says getting pre-approved for a mortgage is more important than ever. A letter from a lender saying you qualify for a mortgage loan of a specified amount is going to be necessary for any seller to take your offer seriously.
Keep in mind, pre-approval does not mean you will automatically get a loan. The mortgage underwriting process is arduous, at best.
In fact, that's one thing that hasn't changed since last spring.