What to Expect Buying a House in This Economy

couple outside new home with sold sign

A house is the biggest purchase most people will make in their lifetime, so it pays to be prepared and know as much as possible before starting your search. Here are a few things to understand as you embark on your homebuying journey.

Understand Your Area

We've all heard statements like "it's a buyer's market" or on the flip side, "it's a seller's market." Truth is, this varies greatly by area.

L.A., for example, is an incredibly competitive market where real estate below the $1 million mark sells incredibly quickly and often has multiple bidders. Some other markets, however, are kinder to buyers.

Knowing what type of market you are in will help you greatly. If you are in a more competitive market, you will need to make sure you get to houses for showings right when they are listing and be prepared to make an offer immediately when you find a home you like.

If you're in a less competitive market, you may have more time to see and make an offer on a home.

Work with Agents

smiling real estate agent meeting couple

A real estate agent is your guide to buying the best home possible at the best rate. Make sure you do your due diligence when selecting an agent to work with. Read reviews online, ask for referrals from friends, and talk to the agent to make sure you work well together and are on the same page.

A lot of people don't realize that some agents specialize in buying or selling. Many also are hyper-focused on specific geographies. Make sure you pick an agent with the right expertise.

You should also ask about the agent's team. Make sure you will be getting one-on-one attention from the agent and not someone on their team.

Prices are Rising

While some areas won't see the rapid, double-digit price increases they did last year, prices are still expected to rise this year. Home prices are expected to increase 2.8% this year, according to The National Association of Realtors.

Make sure you keep this in mind when looking at homes. Real estate is generally an asset that appreciates in value.

4. Get Pre-Approved

couple signing home loan

Before you even begin looking at houses, you should see what kind of mortgage you can get approved for. This will help you better understand how much you can actually spend on a home.

Furthermore, having a lender lined up will make your bid look more competitive in a multiple offer situation because the likelihood of your offer falling through is lower than it is for someone without pre-approval.

Expect Higher Interest Rates

Just like prices, interest rates are also rising. One thing to keep in mind, though, is that even though interest rates are higher now than they were this time last year, they are still at historically low rates.

If you are shopping for a home you may feel some pressure to commit to a home quickly to lock in a certain rate, but you still need to make sure the home is right for you. As mentioned before, a home purchase is a big deal so make sure you are making an informed decision.

Remember Closing Costs

person with calculator and laptop

While the seller is generally on the hook for things like agent commissions, there are still a lot of closing costs you need to keep in mind before purchasing a home in this, or any, economy.

For example, you will need to get a home inspector to look for issues in the home. Once you close, you will likely want to make a few changes to the home before moving in, even if it is just a fresh coat of paint.

You should also plan on changing the locks to the house before you move in. Movers and new furniture to fill the space should also be taken under consideration when understanding the costs of moving.

Be Patient

Don't get discouraged: buying a home can take time. Just because you lose out on the first home you see doesn't mean there isn't a home out there for you.