Why 2021 will be harder for first time buyers

Planning to buy your first home in 2021? It's important to understand the tough market you will be competing in and ways to set yourself up for success.

As of today there are only 7,287 Active and Coming Soon properties in all of Maricopa County, which has a population of almost 5 million. At this month's sales pace, it would take just 1.4 months to sell every home on the market, an all-time low, according to the National Association of Realtors. There aren't nearly enough homes to meet the demand.

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Side Note: Months Supply of Inventory (MSI) is a calculation that quantifies the relationship between supply and demand in a housing market so we are able to see if the market is favoring buyers or sellers.

Generally, a balanced market will lie somewhere between 4 and 6 months of supply. If MSI is less than 4 months, sellers have gained negotiation power. If MSI is above 6 months, buyers have gained negotiation power.

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With the small inventory of homes selling fast, control lies with sellers and buyers have little power. Here is how you can better navigate the market:

Start Early

By starting early, you give yourself time to explore neighborhoods and learn the market all while building your credit and saving for a bigger down payment (or your closing costs). It's highly recommended to start your home search 5-6 months before your desired move in date. The last thing you want is to be rushed into a quick purchase.

Before you start seriously looking at homes, it's imperative to get prequalified with a mortgage lender (not a big bank - a local mortgage lender who focuses solely on home loans). Once you have your maximum purchase price, decide what you need and what you won't budge on. Those are your deal breakers. Resist the temptation to compromise on deal breakers, even when you feel discouraged.

You may have a maximum price and commute time, a minimum size or other requirements. Those are your deal breakers. Write them down. Resist the temptation to compromise on deal breakers, even when you feel discouraged.

Look For the Smart Investment

When you’re looking for the right home, it may be hard to imagine selling it down the road. But even if you think it’s your forever home, you should shop with resale value in mind. Here are some home-buying tips to help you make a smart investment:

• Don’t compromise on location.  No amount of curb appeal or remodel projects can make up for a terrible location. If you don’t love the location, chances are potential buyers years from now won’t either.
• Look past the surface. While you can't change the location, you can always change the house. Don’t let an outdated interior keep you from an otherwise great home. Other buyers may not be able to look past these details, which could score you a deal.
• Aim for the least expensive home in the best neighborhood you can afford. This gives your home’s value room to grow in the future. Keep in mind that future buyers who are shopping in a $400,000 neighborhood won't be looking for a $500,000 home.

Make Decisions Fast

In today's market, many homes are on the market for less than a month, so it's important to make an offer quickly once you find one you like. Let your list of deal breakers be your guide. If a home meets your criteria, including an acceptable price, it may be worth pulling the trigger. Again, quickly, because many sellers field multiple offers within a day or two of listing the home and planting a "for sale" sign in the yard.

Learn More About How to Buy a House

This is just a snippet of information to get you started, but there's a lot more to learn. Access my homebuyers guide, which outlines the entire buying process. If you’re feeling overwhelmed, don’t worry. You don’t make your biggest investment without the guidance of trusted professionals - so start building a power house team now!

And remember, I am just a click away!