The spring homebuying season so far has been marked by mixed signals as the nation’s housing supply remains limited, causing home prices to remain high year-over-year. At the same time, mortgage rates have moderated.
While hopeful homebuyers may be feeling the whiplash of the last few years, their outlook remains optimistic. According to Bank of America’s 2023 Homebuyer Insights Report, while more than half of prospective homebuyers surveyed (55%) believe the market is more competitive than last year, just as many (54%) plan to either speed up their home purchases or buy when they originally planned – including 62% of Gen Z and 55% of Millennial homebuyers.
Even the experts don’t hold a crystal ball to the ins and outs of the homebuying market, but these are three broader trends Maryland buyers can anticipate in the months ahead:
- Limited housing supply: Low inventory has created a challenging market in Maryland for the past several years. The reality is this might not change any time soon given owners have locked-attractive mortgage rates making them reluctant to sell.
- A steady start to the year: High rates are challenging affordability, but Bank of America expects mortgage rates to fall to 5.25% by year-end. That said, a common mistake that potential homebuyers make is waiting and trying to time the market. Instead, consider your personal timeline and when you’re financially ready to buy.
- Buyers hold more decision-making power: At the height of the homebuying frenzy, there were stories of homebuyers overbidding by enormous sums or making numerous concessions. As we shift to a more balanced environment between buyers and sellers, buyers will have more time to think and negotiate – making the shopping experience more manageable.
The challenges and opportunities that the homebuying environment presents will require some careful planning for those looking to buy. Whether 2023 is the year you become a homeowner or purchase your second home, here are a few strategies to get you started:
- Take advantage of digital tools: Looking for more convenience and control over home financing? Online resources can guide you through the mortgage process from start to finish and prevent any delays in the process, whether it’s checking the status of your loan or submitting required documentation electronically. They’ll even provide you with a to-do list of outstanding tasks and status and details of a loan application.
- Show sellers you can meet financial obligations: Whether you’re getting additional down payment assistance or earn a larger income, putting down a larger down payment could lower your mortgage rate. Anytime you can showcase to the seller that you’re in a good financial position, you should do so, as it’ll make your offer stronger.
- Pay discount points on your mortgage: Mortgage points, also known as discount points, are fees you pay your lender at closing for a reduced interest rate on your loan. While this might not be the right strategy for everyone, paying discount points on your mortgage could offer potential savings over the course of the loan. In general, the longer you plan to own the home, the more you’ll save using points. Also determine whether you have the cash available to buy points up front.
- Research assistance in upfront costs: Even if a monthly mortgage payment fits into your larger financial picture, many homebuyers might still be struggling with saving for the down payment and closing costs. Recognizing cash reserves are often the biggest barrier to homeownership, Bank of America offers down payment and closing cost assistance – no repayment necessary. Additionally, the Bank of America Down Payment Center helps homebuyers find state and local down payment and closing cost assistance programs in their area and the Bank of America Real Estate Center® identifies down payment and closing cost grant-eligible properties for sale across the country.
- Take your time: Finally, don’t rush into it. Take time to improve your credit score, research lender options, and understand what you can comfortably afford before jumping in.
While buying a home today may require a bit more patience and persistence, taking the time to prepare for what’s ahead, going in with the right mindset and taking advantage of the resources available to you can put you well on the path to your next home.