What to Expect When Buying a Home in 2021

1. Prepare for Higher Prices

If you are planning on buying a home, expect some sticker shock. Home prices have surpassed previous all-time highs in many parts of the country and the DFW area is no exception. There is a good chance you’ll be paying more than the Zestimate for the property in question due to limited inventory and strong home buyer demand.

Additionally, home prices in May went up 26%, and prices are expected to keep increasing according to real estate experts. Therefore, if you are ready to buy a new home, the sooner you start your home search, the better. 

In short, buying a home in 2021 often means paying over the asking price, even if the original list price seems high.

2. Get Pre-Approved for a Home Loan Early

With home prices at all-time highs, it is important to get pre-approved for a loan with a bank or mortgage lender ASAP.

If you don’t know how much you can afford, you’re basically wasting your time by pursuing listings and going to open houses that could be out of your price range (or perhaps even below the amount you can actually be approved for). This is especially true if the homes you’ve got your eye on are consistently going above asking since you’ll need even more purchasing power.

It’s not hard or all that time-consuming to get a mortgage loan pre-approval, and it’ll give you more confidence and perhaps make you more serious about finally making the move. Plus, you will want to have a pre-approval letter ready because you cannot submit an offer without one and homes are not staying on the market very long. 

Tip: Look for an online mortgage lender that lets you generate a pre-approval on the fly in minutes.

3. Housing Inventory Will Be Limited

It’s the same story in 2021 as it was in 2020. While we saw an uptick in inventory in 2019, it appeared to be short-lived and now the housing supply is at an all-time low! 

With low-interest rates and many Americans hitting the common first-time buyer age of 34, you can expect competition to intensify. Again, this supports the argument of being prepared early with a pre-approval letter so you’re ready to make an offer at a moment’s notice!

4. You Will Likely Be in a Multiple Offer Situation

With low inventory on the market, it is very likely that you will be in a situation where there are multiple offers on the property you are interested in. Be prepared for this and decide how much you feel comfortable offering for the home you love. In many cases, we are seeing 30-40 offers on a home. 

Don't let multiple offers scare you away. There are many factors, not just the offer price, that sellers consider when accepting an offer. 

5. Check Your Credit Scores and Put Away Your Credit Cards

While you’re at it, check your credit scores (all 3 of them) and determine if anything needs to be addressed. Your mortgage loan officer or bank can also help you with this. 

Credit score changes can take time, so give yourself plenty of it. Don’t wait until the last minute to fix any errors or issues.

And while you’re addressing anything that needs more attention, do yourself a favor and put the credit cards in the freezer (or somewhere else out of reach). Lots of spending, even if you pay it back, can ding your scores. It can also increase your debt-to-income ratio and limit your purchasing power. Ultimately, bad timing can create big headaches.

Additionally, pumping the brakes on spending might give you a nice buffer for closing costs, down payment funds, and moving costs.

6. That Home Might Be a Fixer

You probably don’t have the same skill set as Joanna and Chip Gaines, but you might still wind up with a fixer-upper thanks to the limited inventory. And that’s totally okay.

It is fairly common to want to make some upgrades to your new home as everyone has different design aesthetics. Don’t be afraid to go down that road, but also know the difference between superficial design updates and major design challenges.