October 17, 2023
Regardless of the market temperature, buying a home is huge decision that requires forethought and careful research. One of the biggest challenges buyers face in today’s search for their dream home is the low inventory market.
When the number of available homes is low and competition is high, it can be difficult to even find the right house. Let alone compete against the increasing amount of offers coming from other buyers. In this article, you’ll learn how to navigate the challenges of a low inventory environment and succeed in purchasing a home.
What is low housing inventory?
Low housing inventory means there are far fewer homes for sale than there are buyers who are looking to purchase. You may also hear it referred to as a seller’s market. Low housing inventory can make it difficult for homebuyers to successfully purchase a home due to the increased competition for the available homes.
In this type of housing market, home prices tend to increase, and buyers are sometimes forced into bidding wars over desirable properties.
Low inventory real estate strategies for buyers
It may be a challenge, but succeeding in a competitive housing market is certainly possible if you have the right strategies and preparation. Here are some tips to help you navigate and succeed in a competitive housing market:
Get pre-approval from a trusted lender: Before you start house hunting, get pre-approved for a mortgage. This not only helps you understand how much you can afford, but also makes you a more attractive buyer to sellers.
Work with a knowledgeable real estate agent: A skilled real estate agent with local expertise can provide valuable insights and help you find listings that match your criteria. They can also negotiate on your behalf, providing valuable advice as you search for a home and submit offers.
Research the areas you’re interested in: It’s important to know what you want in a community as well as a home. Decide what neighborhood amenities you need, research schools in the area, proximity to your work, and other local features. That way, when a property becomes available, you’ll be able to act fast and be confident that you’ve found the right home.
Be ready to act quickly: In a low inventory market, good properties sell quickly. Be prepared to make quick decisions, and don't delay in submitting an offer when you find a home you like.
Set realistic expectations: You may need to be prepared to compromise on some aspects of your dream home, such as location, size, or features. Be flexible and open to options that meet your core needs.
Know your limits: Determine a maximum budget and stick to it. It can be tempting to get caught up in bidding wars, but overextending yourself financially may lead to problems down the road.
Make a strong offer: You’ll need to make a strong initial offer to stand out from other buyers. This might involve offering more than the asking price or including fewer contingencies.
Consider an escalation clause: An escalation clause in your offer allows you to automatically increase your offer by a specified amount if there are competing bids.
Be patient: It can be frustrating to lose out on properties to other offers, but don't lose hope. New listings will come on the market, so keep searching and stay patient.
Stay informed: Continuously monitor the market for changes in supply and demand, interest rates, and local trends. This information can help you make informed decisions. Be in contact with your real estate agent daily to stay up to date on any changes occurring in the market in your area.
It’s important to remember that success when housing inventory is low requires a combination of preparation, flexibility, and persistence. Be extra proactive, work closely with the real estate professionals and your lender, and be vigilant in adapting your strategies as needed.
Homebuying is a long, involved process, but your lender is here to help with mortgage options and tools that can help turn the dream of homeownership into reality.