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7 Strategies If You’re Priced Out of Buying a Home

If you’re finding it difficult to buy a home in today’s market, you’re not alone. The median sales price of an existing home reached a record high of $389,800 in 2023, according to the National Association of Realtors (NAR). With low inventory and the lowest number of existing-home sales since 1995, it’s a challenging time for homebuyers. However, there are several strategies you can consider to navigate this tough market.

1. Give Yourself More Time

Pausing your home search might be beneficial. Experts predict that mortgage rates will drop in 2024, potentially increasing the number of homes on the market and improving inventory shortages. Lower mortgage rates will make buying a home more affordable and give you more financial flexibility.

2. Keep Saving Money

Use the extra time to save for a down payment. In 2023, the typical first-time buyer made an 8% down payment, the highest since 1997. On a $389,800 home, that’s $31,184. Automate your savings and set aside windfalls like bonuses, gifts, and tax refunds to build your down payment fund.

3. Pay Off Debt

High mortgage rates make it crucial to secure the lowest interest rate possible. Paying off debt, especially revolving debt on credit cards, can help increase your credit score and reduce your debt-to-income ratio (DTI). Mortgage lenders typically prefer a DTI of 43% or less, and a DTI of less than 36% puts you in an even better position.

4. Stay Connected to Your Agent

Maintain communication with your real estate agent. They can keep you updated on new listings in your desired areas. If your financial situation improves, your agent can quickly help you adjust your search criteria.

5. Expand Your Search

Consider broadening your search criteria. Can you compromise on the number of bedrooms or bathrooms? Would you consider a different geographic area or a longer commute? Flexibility can help you find a home within your budget in a low-inventory market.

6. Stick With Renting

It’s okay to continue renting for a while. In many countries, renting is more common than owning. With high mortgage rates and monthly payments, renting might be a more financially sound option for now.

7. Apply for Homebuying Assistance Programs

Explore state or federal homebuying assistance programs. First-time homebuyers may have several options, including FHA, USDA, and VA loans, which offer low down payment mortgages. State and federal down payment assistance programs may also be available based on your income.

The Bottom Line

While it may be disheartening to be priced out of buying a home right now, it’s likely a temporary situation. Stick to your plan and continue taking steps to achieve your goal. Every dollar saved, every point added to your credit score, and every new home that appears in your search brings you closer to homeownership. And if you decide to keep renting for a while, that’s a valid and worthwhile option too.

For any mortgage service needs, contact O1ne Mortgage at 213-732-3074. We’re here to help you navigate the homebuying process and find the best solutions for your needs.

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