Investors are easing homebuying in 2023. Here’s why this is a good thing

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Less home competition? Yes, please.

Did you look at the housing market in 2022 and shake your head sadly? You definitely have a company out there. But as we move further into 2023, there is one small bright spot. Redfin recently released some forecasts for the 2023 housing market. Redfin believes investor activity in the market will ease somewhat this year. This could mean fewer investors choosing to sit and rent out the homes they currently own instead of buying and selling properties.

If you’re looking to buy a home this year, this potential development is welcome news. Here’s why:

A little good news for buyers

2022 has started off bad enough for buyers, with rising home prices across the country. This is thanks to 2020 and his 2021 home-buying frenzy (and housing shortages). According to Freddie Mac, the average interest rate on his 30-year fixed-rate mortgage in early 2022 was 3.22%. At the time of writing this, the interest rate on the same mortgage he has is 6.48%.

Investors leaving the market won’t affect interest rates, but if there’s less competition for available homes, you’ll save money on purchases that way (and avoid getting into a bidding war). . This year may be a good year to find out what the magic of bargaining can do for you instead of asking for a house. It may also mean giving the seller some concessions, such as covering.

If Redfin’s predictions come true, competition from real estate investors may decrease, but it will still require competition from other aspiring homebuyers. Here’s how to give yourself a fighting chance.

Be the best buyer you can be

Ideally, there is no rush to buy a home. If your rental situation is bad, or you need to move sooner or later, you may not have the option of undertaking these tasks. But if you can wait for the right time (and the right home), here’s what you can do to be the best possible buyer.

Improving your credit score

Mortgage lenders want traditional loans to have a FICO score of at least 620, but if you can beat that, you’ll qualify for better interest rates, thus saving you money. (And even a little counts towards the average interest rate). as much as now). Focus on removing mistakes from your credit report and making payments on time. This has a big impact on your score.

debt repayment

This will also improve your credit score and show lenders that you can keep up with your mortgage and all other costs of owning a home. increase. Because this is generally the threshold that lenders want to see from borrowers.

save money

Not only do you need a down payment on your home, but you also have to pay mortgage closing costs (if you can’t get the seller to cover them). Also, I don’t want to completely bankrupt myself in the process of buying a home. A hallmark of owning a home are the unexpected expenses. Additionally, when you buy your own place, you may want to paint it or do a little remodeling.

Please lift your chin. Sometimes there is good news. And fewer investors to contend with this year could mean less competition and less bidding wars for the average aspiring homebuyer.