You have options and more options. As bleak as the buyer’s market might seem right now, there is always a silver lining. Keep in mind that the lack of inventory and bidding wars is having the biggest impact on first time buyers. First time buyers are often defined as people not having owned a home for at least two years. People that need to come up with a down payment, people not having a recent credit history of paying a monthly mortgage, and having multiple other hurdles to overcome to become owners.
However, there is still a large portion of the buyer’s market that are repeat buyers. People who are buying up, retirees that are buying down, people that are relocating for work, retirement, health, etc. Although low inventory is an obstacle for them, they have far fewer other hurdles to deal with. If you’re among these people, you have many more choices.
Due to low inventory, your selection of houses might be more limited but there are still houses to select from. You may have to pay more for your next home than you want to. But you’ll be putting your existing home on the same tight market. When you sell, you’ll benefit from the appreciated value and the bidding wars. You have equity to trade for where you now want to live.
There are countless studies available about the best neighborhoods to live in. Regardless of the statistics, the best neighborhood for one person isn’t the best for another person. Maybe surprisingly and maybe not, neighborhoods with a Starbucks coffee shop have a tremendously high rate of home value appreciation. In the 17 years, concluding in 2014 (including the Great Depression), these homes almost doubled in value (up an average of 96 percent). Great – if home appreciation and a coffee shop are among your primary focuses in life.
At the other extreme, are many people wanting nothing to do with city life or suburban life or even small town life. People preferring to live off the grid. People providing their own water source, their own heat and shelter, and every other necessity. There are a growing number of these people. These are not what you think of as traditional hill people. These are college educated people willing to make a two or three hour commute to a good paying job. People spending their earnings on solar systems and windmills. Many are not survivalists. They just have their own version of tranquility.
Of course, there is everyone else in between. Other studies show high rates of value appreciation in neighborhoods next to big box stores and other high-density retail centers. While, other studies find thriving neighborhoods surrounding farmers’ markets. The key to buying your next home is first knowing what floats your boat.
There are truly countless ways to research where you want to live. Just google “best places to live” to find more than 300 million research options. But you might want to narrow it down a little. You could begin by researching “life style choices” to read literature and view videos about the choices available. Or maybe you already know you want a high quality school district, or specific neighborhood amnesties, or low crime, or a lake, or a mountain, or a golf course, or…
Or a combination of several. This is the information age, the answer (or at least information) is at your fingertips.
Then go live the life to some extent. Walk the neighborhood during the morning, afternoon, evening, and weekends. What’s the traffic like during rush hour? Talk to your future new neighbors, people walking dogs, working in their gardens, people hanging out at the condominium pool or gym. Go to the local coffee shop or park. Do your grocery shopping there for a month or three. Visit second-hand stores to see what was once in their homes. Go to church there a few times. Are the people friendly or standoffish? Is there an interesting mix of people or is it an ethnic neighborhood? Which do your prefer? What other specific questions should you be asking?
Still not sure? Live there for a while. Rent in the neighborhood. It’s a great time to rent out your current house for more than the mortgage while you live in your prospective neighborhood. Do a lease with an option to purchase for two years. Rent a home on a lake during the winter off-season. According to Google, you have more than 300 million research options.
Only after you find the right neighborhood does it make sense to fret over the few number of homes available for sale. But it’s still not about the perfect house. Once you find the perfect neighborhood, you can always pack up to move into a better home in a few years. That’s much easier than picking up the perfect house to move it to the perfect neighborhood.
Please leave a comment if this article was helpful or if you have a question.
Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.