Tips for Homebuyers Struggling in a Tight Market

Summer often brings transitions. In between school years, families relocate, or consider looking for a different house. First-time buyers hit the streets, too. If you’re among those dipping your toe in the market, you might be noticing how frustrating it is: There’s a housing shortage.

Home prices have increased by 40% in the last four years, according to the National Association of Realtors, but incomes are up only 10% over the same period. That means it’s hard for many people to find the home of their dreams in their price ranges.

In the latest contribution to LetsMakeaPlan.org, CFP®Board offers four tips to help you keep a cool head in a hot market, so that when you open the door on the right house, you’ll be ready.

1. Run the numbers: Understand how much home you can afford to buy and whether home ownership might preclude you from addressing other important financial issues in your life, like paying off debt. A CERTIFIED FINANCIAL PLANNER™ professional can help you understand how your housing choices can support your overall financial plan.
2. Start the mortgage process/correct credit report mistakes: If you have not done so in a while, go to AnnualCreditReport.comand request your free copy. It’s important to correct any errors on the report before you start the mortgage process.
3. Conduct research: Even if you are working with a realtor, check out new listings and spread the word throughout your network. You never know who might be about to list a home.
4. Keep your emotions in check: Even with limited supply, there are a lot of houses out there. Be careful not to blow through your budget or put yourself in a position where you own two homes.

To buy the house of your dreams in this environment, you may need to save more, look longer and be alert to unexpected opportunities.