While the real estate market has cooled significantly since the pandemic highs when prices were soaring, and nearly every home seemed to be getting multiple offers, prices are still elevated. This is especially true in certain communities. For example, homes in Fairfax, Virginia, and other nearby markets tend to be above national averages.
The same is true in major metro areas and their suburbs around the country.
It can leave would-be buyers feeling like they’re priced out of their housing market, but there are some things you can do to get creative and still find a home, even in an expensive area.
Improve Your Financial Situation
If you feel like you’re priced out of the housing market, one of the things you can start doing immediately is improving your financial situation. It’s not necessarily the most exciting option, but it can put you in a position where you are able to buy in a shorter timeframe than you might think.
Start out by using a mortgage calculator so you can estimate your monthly payment. This will include your estimated home insurance and property taxes. Then, to this figure, add utilities and 20% of your monthly mortgage payment to deal with any unexpected repairs or maintenance.
From there, take your rent payment out of the total, and put the rest aside in a savings account that earns interest.
So why do all this even when you aren’t yet a homeowner? This can help you get into the mindset of what it is to be a homeowner and help you understand how it’ll feel spending that money every month. You’ll have a smoother transition if you’re mentally prepared as you’re moving from renter to homeowner, but you’ve started to get a feel for the financial ramifications of ownership.
You can also pay down debt because this will improve your debt-to-income ratio and your credit score. Both of these are important things considered by lenders when they decide whether you qualify for a home loan and, if so, what rate they’re willing to extend to you.
If you’re working on cleaning up your finances and becoming a homeowner, it’s also time to shelve any big expenses, as frustrating as that can be.
If you’re currently in the process of saving to buy a house, you might have to rethink your rental situation. If you’re in an expensive rental, that’s not going to help you put more towards your homeownership goals. During this time, you might think about moving out of your expensive rental and into something more affordable.
You might move further away from the city center, for example, or choose an apartment with fewer amenities. Anything that you can put towards buying a home is going to be helpful.
If you can’t leave your current rental, maybe consider getting a roommate.
Be Able to Define Your Needs vs. Your Wants
There are a lot of things you might want in a home, but do you need them? You need to sit down and physically write out your needs and then your wants in a home.
You might find places where you can make changes in how you shop for a home that could help you break into the market even when it’s pricey.
You might buy something smaller than you thought, or maybe you change the neighborhood where you plan to look.
Talk to a Real Estate Agent
There’s a tendency to think that because of how much information is available online and all of the real estate listing sites that are out there that you don’t need a real estate agent. The reality is that a real estate agent can be your most valuable resource, especially if you’re struggling to see how anything in your area will be affordable to you.
An experienced real estate agent is going to be able to help you see the local market in an in-depth way and find something in your budget range. They can also handle negotiations to potentially get a lower price. Real estate agents are excellent at finding affordable little gems in your targeted area and helping you explore neighborhoods you might not have thought about.
When a house is sold, it’s usually the seller that covers the fee for the buyer’s agent. Working with an agent is very likely going to be one of your best ways to save money.
Consider a More Affordable Market
Sometimes, a more affordable market might mean you change neighborhoods, but it can also mean a different town or city altogether.
Home prices can vary significantly even between a city area and the suburbs.
It could be that there are downsides to a more affordable market, like a long commute, so it’ll be a personal question as to whether lower housing costs will be worth the tradeoffs.
If you’re someone who works remotely or could, in theory, change jobs, it might be that you even end up moving to another state. For example, your budget might go a lot farther in a low-cost state such as one in the southeast compared to the western part of the country or the northeastern region.
Shift Your Expectations
If you want to buy a house now and feel like you can’t afford to, you might change your overall expectations as far as what a home can look like for you. For example, townhomes and condos are excellent options that are often more affordable than single-family detached homes but still have the benefits of homeownership.
It’s easy to feel discouraged when it seems like buying a home is completely out of your reach, but there are solutions. One of the ideal things to do for yourself is to start working with an expert realtor sooner rather than later because they’re going to be your best resource to figure out what the best options are, given your specific situation. Even if you aren’t sure whether you’re even ready to buy, you can still get a head start by talking to an agent.
