Tips for Buying in a Tight Housing Market like Denver
Here are some tips for homebuyers active in a tight market.
While the U.S. housing market has largely recovered from the global financial crisis, that doesn't mean buyers have had an easier time locking down the house of their dreams. Across the nation, a number of markets are running red hot. Not only do many areas feature more buyers than sellers, they also present low inventories that further squeeze the market. Indeed, some cities like Denver, Seattle and San Jose are experiencing such highly competitive stretches that more consumers are offering cash deals to get ahead of other buyers.
The tight housing market in Denver—impacted by low inventory and powered by a flourishing local economy—has created some challenges for buyers. However, even with this level of competition, there are some tactics homebuyers can take to try to level the playing field and give themselves an advantage. While tight housing markets will remain competitive regardless, being proactive about your finances and preparation can increase your homebuying profile.
Here are some steps to take:
Get preapproved for a mortgage, if your lender offers the option
There's no better way to show sellers you mean business than by carrying a letter of preapproval from your lender, if possible, to any home showing you attend. Yet either because they lack the time or the awareness, many buyers today still don't take this preliminary step. Preapproval involves working with your lender to determine the best mortgage size for you given your personal finances (like debt-to-income ratio) and credit score. It's a step above prequalification, which may just indicate how much home you can afford and not how much you should spend.
Thoroughly research the market
While there are limits to how intensely you can research a housing market like Denver's (especially if you're moving from another area), a competitive climate means digging deep. It's important to stick to your core criteria for a home, such as nearby schools, relative neighborhood or number of rooms. However, slightly bending the limits here and there can bring new options into the mix that you might love. You never know when you'll happen upon that one hidden gem that checks off all your boxes.
Be ready to act quickly
This tip is a bit dependent on potential prerequisites like getting preapproval, but taking a mindset of action is necessary in a competitive market. There's little margin for indecision, as the next buyer is always close by. Sellers often want to get the process done just as quickly as their buying counterparts, so making the impression that you're ready to close—or conversely, move on from the deal—will underscore the urgency and possibly work in your favor. And if it doesn't, then that's less time being strung along when you could have been spent looking at other homes and doing more financial planning with your lender.
When hunting in a hot housing market, it helps to have all the support in your corner that you can. For Denver area buyers and others, Vectra Bank can be that financial partner to help secure a mortgage and a home.
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