Buying a House in a Hot Market (and Surviving)
After buying our home in May, I learned that buying a house in a hot market is difficult. Here are 3 things you should know about buying a home in a hot housing market.
I'm stoked to say that my wife and I just closed on our house in mid-May! It was a several month process looking, offering, and working through the closing contract. But we did it and it's totally worth it :)
The housing market is super hot right now, especially where we live. We had to make 8 offers on different homes until we got one because there are so many people bidding on houses! We didn't give up and finally got a house that fits all of our needs and meets many of our wants :) This is the very first home we've bought and after everything we went through, this is my advice for buying a house in a hot market.
1) Keep Your Wits About You
Before you buy a house, make sure you won't become house poor when you actually buy. A good rule of thumb is to have your mortgage expenses be 25% or less of your monthly take home pay after taxes. If you don't follow this rule, you will end up racking up credit card debt or having a lower standard of living than you currently do. Is it worth buying a house if you can't do anything else with your money for the next 30 years? For more info on this 25% rule, you can read more about it at Dave Ramsey's website.
2) Define Your Budget
You will need to make your budget beforehand, and stick to it. It is very easy to go over budget in a hot housing market. Before you make an offer on a house, define your max budget and then don't budge. It's easy to get emotionally attached to a house you love, but don't go over your price point you set up! A good way to calculate your monthly mortgage payment is using a mortgage calculator. I used the U.S. Mortgage Calculator and loved it. It is very accurate and will tell you your monthly mortgage as long as you know the finer details like taxes and private mortgage insurance. You can find it here.
3) Don't give up!
House-hunting in a hot market is like fishing. You might not get the first house you offer on, or the second, or even the third... But be patient and eventually you will get a catch in your price range that you need and even want! That is exactly what happened to us. We bid on many different homes before we got our house! Houses where we live where going for 5-15k above asking price because things are so intense! But since we stuck with it, we found a place that meets all of our needs, most of our wants, and it's 10k beneath our budget.
Don't give up, because owning your own house it totally worth it and good things come to those who wait. These 3 simple rules are easy to understand but difficult to actually apply when you are in a super hot housing market. It may take months to finally find a house that is in your budget and that you love. Keep with the house hunting and don't give up, because owning your own place is so much better than renting.