Between median U.S. home prices topping $400,000 and what feels like a brutal lack of houses to even look at, being a homebuyer is a tough, tough job. U.S. home prices were up 6.5% in February compared with last year, selling for a median price of $412,219, according to Redfin. The National Association of Realtors (NAR) reported 2.9 months of inventory available in February, up from 2.6 months the year prior, which is certainly a positive sign. With interest rates unlikely to change much this year, however, there’s no chance of reaching a truly balanced market in 2024.
Buyers are out there as we move into spring homebuying season: There were 337,425 homes sold in February, up 2% year over year.
How long does it take to actually find a house? And how many offers will you need to make to secure your own contract? A few factors are at play: the number of homes available for sale in your market and price range, how many other buyers are looking at the same houses, and how willing you are to work with any given seller on their nonfinancial needs, like extended moving time.
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First, the Bad News: The Market is Still Fierce
According to NAR’s January 2024 Realtors Confidence Index Survey, the market is, indeed, still a-rockin’: 16% of homes continue to sell above list price, a consistent finding since January 2023.
Despite this, 28% of homebuyers were first-timers in January, but another 32% were all-cash buyers, the highest share since June 2014, indicating the market is still very mixed. First-time buyers may be at a disadvantage in many markets, since they often use down payment assistance programs attached to special lending products, which can be a hard match against a buyer bringing cash to the table.
On the other hand, according to NAR, median days on the market rose to 36 in January, from 29 in December and 33 a year prior, so there’s hope there may be a bit of breathing room coming from those higher interest rates. Higher days on the market generally indicate a less competitive environment, since it takes longer for an average house to go under contract. This is in huge contrast to just a few years ago, when you might have a window of a week or less to see a home and make an offer before someone else scooped it up. Still, experts indicate that it can take weeks or months to find a home because the inventory is still very tight.
Across the country, real estate agents report the same thing again and again — it’s rough out there.
“We look at months of inventory — which is how long it would take to absorb the homes/inventory currently on the market,” says Jill Butler, CEO and owner of Red Key Realty Leaders in St. Louis. “A balanced market is five to six months. We are currently at one month of inventory in St. Louis County and two months of inventory in St. Louis City. It is still a seller’s market, with such low inventory.”
It makes sense. After all, there’s no real incentive for many homeowners to sell their properties.
“Due to the interest rate increases in 2023, there was a severe lack of inventory for buyers because sellers with a 3% interest rate didn’t want to sell their home and trade it for a lesser home at a higher interest rate,” says Neil Brooks, agent within the Veterans United Realty Network and real estate agent with My Home Group in Scottsdale, Arizona.
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How Many Offers Does it Take to Buy a House?
According to NAR’s survey, on average, a listed home in January 2024 received 2.7 offers, up from 2.5 offers in January 2023. That might be a daunting thought for buyers who don’t want to fight for their home, but according to experts, it is still possible to get a home without the drama. While there are still bidding wars out there, and it’s certainly solidly a seller’s market, your odds of choosing a home you don’t have to fight for are getting better.
“In the current environment, buyers can often get the first house they make an offer on,” says Tamar Asken, real estate agent and founder of Parasol Realty in Beverly Hills, California. “If buyers are offering realistic prices that are in line with market values, they may only have to make offers on one or two properties to get an acceptance.”
However, Asken cautions, if you’re coming in with a low offer, you can expect to hit some turbulence. She suggests bringing the spirit of collaboration. “Besides offering a reasonable price, try to find out what the seller wants and accommodate them as much as possible,” she says. “Offer them things that are intangible.” This might include extra time to move, especially if they’re still looking for a house themselves, and being friendly rather than combative. That doesn’t mean waiving things like home inspections or financing contingencies, however.
Even in more difficult markets, it’s still possible to find a house on a reasonable timeline, according to Brooks, though you may have to write a few more offers and look at a few more houses. “Market conditions vary all the time, but in general, for the past six months, I normally write two to three offers to secure a property for a buyer and show around 10 to 15 homes,” he says.
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How Long Does it Take to Finance a House?
Finding a house is only part of the equation. You also must obtain financing. Fortunately, according to banking experts, the time it takes to close a mortgage is more in line with what it was prior to the pandemic.
“From the time of the loan application until the signing of the loan documents, a mortgage loan typically takes about 30 days start to finish,” says Zach Miller, loan officer with Gershman Mortgage in Springfield, Missouri. “Depending on the specifics of the borrower’s situation and the real estate purchase agreement, we might see three to six-week closing dates, which we work with to accommodate.”
Miller reports that while underwriting criteria haven’t changed for buyers, it can be easier to get the guidance that will help them qualify for better terms now, while mortgage lenders have time to counsel them one-on-one.
Keep Your Eye on the Prize in Today’s Market
It can be frustrating and challenging to buy a home right now, but that doesn’t mean you should throw all your needs and wants out the window. One of the most important things you can do to prepare is to have a solid understanding of your finances and what it truly costs to buy a home in your market.
“Above all else, you should talk to your lender about what your monthly payment is going to be at your approval price, and even at price points below that,” says Amy Lipton, real estate agent with Coldwell Banker Realty in Brookline, Massachusetts. “That talk should also include everything else that is included in your mortgage, like your insurance, your taxes, your mortgage insurance. This way, you know what your home payment will be and exactly what you’re getting into. No matter how badly you want to buy a particular home, if you make an offer that’s above what you can really handle, it’s not going to go well for you in the end.”
Once you’re ready to step out into that potential whirlwind of a real estate market, just remember what Asken tells her clients to get them prepared for the experience: “You know all those TV shows you’ve been watching about buying a house? Yeah that’s actually not how any of this works. Just keep breathing, it will be OK. I’ll help you through it!”
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How Long Does it Take to Find a House? originally appeared on usnews.com
