Finding the Home for You during the Pandemic

By Adam Oyer – KeyBank Central New York Home Lending Leader – NMLS #411171

Thinking about buying a home?

You’re not alone. Almost everywhere you look, home sales are up – and prices are too.

With more of us spending time at home on account of the pandemic – and thanks to low interest rates – there’s strong demand for more spacious dwellings, leaving fewer homes for sale and considerable competition among buyers.

Here’s a guide to homebuying during the pandemic – from determining your deal breakers to closing the deal.

Buying in a Seller’s Market

From the jump, recognizing the realities of the current housing market will help you reduce surprises and negotiate your search.
Up, up, up. Since the end of summer, total existing home sales are more than 20% higher than during the same span last year, according to the National Association of Realtors (NAR).
Prices on the rise. Entering the fall, the median home price was $313,000 – more than 15% higher compared to 2019.
Low supply. With fewer than 1.5 million homes for sale, housing inventory is at a record low at the current pace of sales and down nearly 20% from a year ago.
Going fast. Homes are staying on the market an average of just 21 days. Around 72% of homes are selling in less than a month, NAR stats show.

Homework

Now it’s time to think through why you want to buy a home. Start by defining your dwelling to help you recognize your next home when you see it. Ask yourself about must-have (and nice-to-have) amenities, which may be shifting in this time of COVID-19. Considerations include:

Office space. Many work-from-home arrangements are likely to continue in some shape, even after the pandemic.
Staying active. Working out under your own roof? Having dedicated spaces for keeping active helps you stay healthy at home.
More nights in. Keep in mind essentials for helping you unwind.
Pets. More furry friends have joined our families during the pandemic – they need their space too.
Delivery. With everything from groceries and takeout coming directly to our doors, consider the offerings you need to be available in your new neighborhood.

Also be sure to take a long view. Most homeowners stay an average of 13 years before selling a place, according to the NAR. With any home you may purchase soon, ask yourself: Is this the right home for after the pandemic too?

Weigh the benefits of remaining in your current home – or waiting until the market becomes more buyer-friendly.

Obey Your Budget

With historically low interest rates, borrowing money hasn’t been this cheap in generations. Still, given mixed economic news, knowing how lenders are tightening requirements can help keep your bottom line balanced.

Credit score. The best terms tend to be available with higher FICO scores.
Prequalification. A mortgage loan officer will help you narrow your search into a set price range before you begin house hunting. Especially in a competitive buying market, this step can strengthen your position as a buyer when you make an offer on a house.
Solicit multiple mortgage quotes; even small differences can add up over the life of your loan.
Turn to resources like mortgage loan officers and online mortgage tools to help smooth the process.
Cost ceiling. With bidding driving up prices, keep in mind this rule of thumb: Strive for your house payments to be lower than 30% of your gross income.
Don’t forget homeowners insurance, property taxes and maintenance fees in your calculations.
Down payment. Know that 20% down isn’t a requirement. Several down payment options are as low as 3% – and sometimes as little as 0%.

Find Your “No Place Like”

Reducing your delays and buying demands can be key in navigating the listings landscape – and snagging a home also eyed by other buyers.

Set your expectations. Get a sense of price-per-square-foot of homes in the areas you’re looking. This measure can help you compare dissimilar dwellings and their value.
Real estate agent at-the-ready. Ask around for recommendations, especially regarding agent responsiveness.
Lean on your agent to negotiate in a bidding war and know when walking away is in your best interest.
Expect limited open houses and individual tours, especially in homes still occupied by sellers.
Pictures, video walk-throughs and 3D tours available on real estate sites can help you spot potential issues.
Low inventory means your real estate agent could suggest seeing fewer homes before starting to submit offers.
Sweeten the deal. Multiple buyers interested in the same home means you will be required to submit your absolute best bid.
Know your upper price limit ahead of time.
Stay positive. Winning-by-bid may take a few tries. That’s OK – it’s part of your journey to the right place.

Close Strong

Once your offer’s been accepted, congratulations are almost in order. Nail these final steps:

Loosen the logjam. Given the plethora of property purchases, prepare for delays, but cause none of your own.
Be flexible, but firm. Push to stay on-schedule as your closing date nears, especially if you have a deadline to vacate your current living space. Build in cushion time, if doable.

Smart homebuying requires preparation, patience and perseverance, even in normal circumstances – and especially in today’s market. Stay informed and safe. Happy hunting.

About the author: Adam Oyer is Home Lending Leader for KeyBank’s Central New York Market. NMLS #411171. He may be reached at either 315-425-8623 or [email protected]. KeyBank is Member FDIC and an Equal Housing Lender. NMLS #399797 © 2021. KeyCorp. CFMA#210312-980187

SIDEBAR: How Much You Should Have in Savings?

Everyone has different needs, wants, and goals. That said, the amount you should have in savings might look a little different from your friend or your neighbor. But in general, you can get started by using a few rules of thumb.

Save for Emergencies: Everyone should have cash set aside to cover emergencies or unexpected expenses that don’t fit into your normal budget. What would you do if you lost your job, or landed in the hospital? An emergency fund can help keep your finances in order while you get back on your feet. At a bare minimum, aim to keep $1,000 in a savings account you can use for emergencies. Then, work on building that up to approximately six months of your take-home pay.

Build a Cash Buffer: In addition to keeping money in a savings account, you probably want to keep a little extra cash in your checking account. The point of this money is to make sure there’s a little more than what you know you’ll spend each month so that you can avoid an accidental overdraft to your account.

Set Aside 10 Percent of Your Income: When it comes to growing your savings, most experts suggest saving at least 10 percent of your income, and earmarking that money for your future. If you can save more, that’s even better; more savings equates to more financial security.

Set up Automatic Savings: Look into savings tools like KeyBank’s EasyUp®, which transfers $1 to your savings every time you use your KeyBank debit card. Those small amounts can make a big impact over time.