Many people locked into low mortgage rates are understandably hanging onto their homes rather than selling. And that is making 2023 one of the most frustrating times ever for homebuyers.
Carol Raeheim is one of those buyers who has been going through homes, dreaming of buying a place for over a year. Unfortunately, her dreams have been dashed over and over.
"A beautiful ranch was our first offer," she said.
But she and her husband were outbid, even though they offered over the asking price.
"So, of course, we bid over the amount, and we did not get that offer," she said. "And that was really a big letdown."
But then it happened again and again.
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Because of the cost of living, several cities are experiencing a decline in population.
"Then we made two other offers and weren't successful," she said.
Her real estate agents, Denise and Steven Taylor of EXP Realty, say with so few homes for sale, it can be a frustrating battle to win a bidding war.
"There's not a lot out there, so there are more buyers looking than there are homes for sale," Denise Taylor said.
Why so few homes? Current homeowners with low mortgage rates are staying put.
"They're sitting on 3%, 2.5% interest rates, so they are figuring, 'Why should I sell?'" Steven Taylor said.
The number of newly listed homes has been on the decline for 56 weeks, according to Realtor.com, meaning there is a near-record-low number of homes to choose from. Another problem is mortgage rates are hovering near 7%, which adds hundreds of dollars a month to borrowing costs.
The median monthly payment listed on loan applications was more than $2,100 in May, which is up 14% from a year ago.
So what can buyers do?
To lower costs, Nathan Grant of Money Tips says buyers should focus on what they can control.
"So the first thing you want to do is look at your credit report, see what your credit standing is," he said.
He says to remove all unnecessary monthly expenses to save for a down payment. Nowadays, you want the biggest down payment you can afford. He says then consult with a mortgage professional or real estate agent about what you can actually afford.
A real estate agent can also alert you just as homes come onto the market.
"These are all things that can apply no matter what the markets will look like," Grant said. "But it's all even more important when the markets are like this."
Denise and Steven Taylor say it's essential right now to be preapproved for a loan. And be prepared to bid over the asking price. However, Raeheim found that even that may not be enough to win the home of your dreams.
"It's a challenge; it's definitely a challenge," she said.
