Tripp's Take on Real Estate | 7 Challenges Buyers will Face in 2024 | Episode 57
Lots of practical content today. Missed last week’s episode, check it out here: https://www.thedomusgroup.com/blog/tripps-take-on-real-estate-episode-56/
The theme of this week’s episode is Buyer Beware. Most people might default to the Latin term caveat emptor, which means the buyer should be careful to do their due diligence before purchasing something.
But my reference is more specific to the market we are currently in and facing in 2024.
Government sponsored enterprise (GSE) Freddie Mac estimates there is currently a 3.8 million housing unit shortage in the United States.
For the past 3-4 years I’ve been referencing a 5-7 million housing shortage. This is not a new problem nor will it be magically solved.
So buyers should be aware of challenges they’ll be facing if they’re seriously considering a home purchase in the future. In this episode, I’ll highlight 7 Buyer Challenges.
And of course there’s implications for sellers here too. So stay tuned.
As we near the end of 2023, I want to start talking about some events we are in the process of planning for 2024. A number of these events are likely to be smaller in scale and reserved for our past and current clients. So if you’re not in that category yet, let’s connect soon. We can help you with that. I hope you’ll be on the lookout for updates and announcements.
Well, I’ve got a lot to cover so let’s jump right in.
Oh, and would you let me know if you like the video feature or the written copy better? I’ve had good feedback on both…but I’d love to get your honest opinion. Click the video above and let me know.
Our Big Why (When We Bought our Home)
This past weekend Cassie and I hosted the Christmas party for our church's teen department at our home. As usual, it was a blast with around 75 teens hanging out on the main and lower levels of our home.
You know, like many people, our home means so much to us, not just as a place to raise our family, but also as a hub for serving others and hosting special events. It's a reminder of the satisfaction we've gained despite the challenges we faced in buying it.
For many years we’ve helped buyers find the perfect home for their needs. So when we say that there are challenges ahead, that will only get worse with time, it’s because we’ve been there and seen what’s about to get potentially worse.
7 Challenges Buyers Will Face in 2024
1. Inventory shortage. I referenced is in my opening. As long as there’s a shortage of quality inventory, there will be challenges for buyers looking to make a move. This problem isn’t going away.
2. Mortgage Rates. Yes, we’re off 20+ year high mortgage interest rates, but the current rates aren’t my major concern right now. It’s what happens when they decline a point. What happens then in a low inventory market where buyers are tired of renting and chomping at the bit to buy? You guessed it: crazy multiple offer situations with contingencies waived and first born naming rights reinstated. It will be the wild wild west again.
3. Complacency. Buying a home over the past five years has not been for the weak. Thinking you’ll figure it out at some point and walk right into a purchase is crazy pants thinking. This will take you and your team a lot of hard work to get you in the right home. It will not just happen.
4. Financial Preparedness. Wanting to buy and being qualified to buy are potentially at the polar opposite end of the spectrum. Desire isn’t sufficient enough reason to do anything. You have to put things into motion and take action to get there. Consider the first time homebuyer who is in love with the idea of buying a home. They go out and look at some open houses and love the idea of putting in an offer.. They don’t know if they’re ready to buy but they’ll give it a shot. Up against someone who missed out on the last round of buying, do you think that idealistic couple stands a chance against the buyers who are loaded for bear? 0%. Those who have taken steps to understand what they can afford, accumulated cash and money for a purchase and have experienced time after time the loss of their offers on house after house after house, they are ready and understand what is needed to be successful.
5. Contingencies. There are clause in a contract that outline key terms that must be met before a property can be transferred or sold. A few of the top contingencies are: home inspection, financing and appraisal. In an aggressive market, these contingencies become pawns that get traded or waived in order for an offer to become attractive to a seller. For the past several years it has been commonplace for most of them to be waived in order to get the house the buyer wants. Obviously this should not be done without full understanding of the significance and potential consequences. But buyers ho have not experienced a tight market before won’t know this without experiencing the rejection of their offer. There should be a ton of educating by the professionals involved for the buyer clients.
6. Deal Problems. How do I say this politely. Anyone can get you in a contract. Professionals distinguish themselves from the hobbyists when challenges come up in the contract and closing process that they’ve seen and dealt with before. Depending on your deal, there are multiple opportunities for the contract to be scuttled and anywhere from 25-50+ people who are involved some way. A strong professional will know these challenges and exactly how to mitigate, minimize and make them go away.
7. Timing. When is the right time to buy? To someone who has 5 months left on their year lease, the answer to that question may be in 3 months as they’re approaching the end of their lease. I would look at it differently and answer that it may be whenever the right opportunity presents itself. Don’t be stuck on the short term loss over the long term gain. Buying a home is a marathon and the timing of when you can and should get in is the minute you are financially ready and you are met with the right opportunity.
There are other challenges that buyers will face getting into a home. I would encourage anyone considering this to set up time immediately to talk through your own situation, timing and needs. If only to start putting together a plan for next steps, you won’t regret it. Reach out anytime…coffee’s on me.
Real Estate Credentials - Good For Something or Nothing?
You may notice in my email signatures I’ll include designations after my name. This isn’t to impress you with an alphabet soup of letters that have no meaning. So I thought I’d explain a few of them to help provide context, because I believe they demonstrate specialized training that, along with years of experience, that ultimately benefits my clients.
We’ll look at a few today and then finish up next week.
Realtor® - this is the designation or term for a licensed real estate professional who is a member of the National Association of Realtors (NAR). This shouldn’t be confused with someone who has been licensed by the state as a real estate salesperson who is not bound by a code of ethics and additional rules and regulations that membership in the NAR offers. A Realtor® is also a member of both a state and local association. For example, I am currently licensed in Virginia and DC. This means I’m a member of the NAR, Virginia Association of Realtors, Northern Virginia Association of Realtors and the Greater Capital Area Association of Realtors (DC).
GRI - The Graduate, REALTOR® Institute (GRI) symbol is the mark of a real estate professional who has made the commitment to provide a high level of professional services by securing a strong educational foundation. This is an intensive course that takes months of study to achieve and is one of the premier designations a Realtor® can have.
ABR - The Accredited Buyer’s Representative designation is the benchmark of excellence in buyer representation. This coveted designation demonstrates to peers and consumers your commitment to providing outstanding service for real estate buyers. This designation is something buyers agents will get initially to help them better work specifically with buyers. As a Realtor® who works with both sellers and buyers, this was an early designation that tremendously helped me learn a ton about the home buying process.
Over my nearly 20 years in real estate, my goal is to ensure that I’m up on the rules, regulations and practices that help me best represent my clients. As a requirement for doing business, Realtors® get their licenses renewed by the state every two years once they complete that state’s continuing education requirements. This continuing education and designation training help to keep us updated to better serve you.
Mortgage Rate Update
The mortgage interest rate (at close of business Monday) on a $500k home (with 20% down and a credit score of ~750) for a 30-year fixed-rate mortgage is 7.051%.
This is down .38 from last week and down over a point from our episode on November 14th.
So Buyers, if you’re thinking about buying, you should move from thinking to having next step conversations. Because when rates drop much more, you’ll see a psychological shift in buyers and then it gets crazy. Pick your crazy. Crazy rates you can re-do when they drop lower or crazy competition with everyone else trying to buy the same house.
As always, reach out with your questions.