What To Expect When You Buy A House
As someone who has owned historic homes over the years, including one built in 1790, Bull encourages buyers to put aside $30,000 for upgrades. The agent has compiled a checklist of what potential buyers should look for when house hunting.
what to expect when you buy a house
From the outside, the 1939 Tudor-style house in Brookline oozed charm and character. But on the inside, every scrap of architectural detail had been stripped away in a 1980s renovation. Nevertheless, one intrepid couple paid $3 million to buy the home and several million to bring it back to life.
As a result, it's difficult to say exactly how mortgage rates will behave. According to Fannie Mae's October 2022 housing forecast, the government-sponsored enterprise expects mortgage rates to fall slightly to 6.6% by the first quarter of 2023 and continue a steady decline to 6.2% in the fourth quarter. Other analysts predict higher rates. To limit your exposure to increasing interest rates, consider locking in a rate quickly and possibly even paying a fee for a longer rate lock period, if necessary.
As interest rates have risen throughout 2022, home sales have seen a sharp decline. Fannie Mae has forecasted that total home sales will reach 5.64 million in 2022, an 18.1% drop from 2021; in 2023, that figure is expected to decline again to 4.47 million, a 20.7% decrease from this year.
As a result, Fannie Mae expects home prices to fall, but only by 1.5% nationwide. Other analysts expect a more dramatic drop, with Goldman Sachs suggesting that home prices may decline by 5% to 10% in the coming year.
Additionally, homebuilder confidence hit its lowest level since 2012 in October, according to the National Association of Home Builders, and the organization expects new construction to continue to decline in 2023.
Wells Fargo's economists expect that buyer demand will remain strong in 2023, but note that it's largely driven by younger homebuyers who are more sensitive to interest rate increases and more susceptible to job loss during recessions.
However, more than half of the economists and housing experts polled in a recent Zillow Home Price Expectations Survey expect that high mortgage rates will impact demand enough to reduce competition between homebuyers in 2023, giving buyers more leverage than sellers.
As a result, if you're thinking about moving in the coming year, don't hesitate to reach out to experts where you live or plan to move. They can help you get a better idea of what to expect and how to maximize your savings on a new home.
When it comes to home ownership, the IRS considers a home to be a house, condominium, cooperative apartment, mobile home, houseboat or house trailer that contains a sleeping space, toilet and cooking facilities.
If you like old homes, you may have aspirations of living in a century-old farmhouse or perhaps a row house constructed in the 1800s. It's not for everyone, but for some people there's something charming and almost whimsical about living in a house that's been around longer than your grandparents. It's the history, it's the look and it's certainly the construction. They just don't build them like they used to.
That's meant as a compliment, but it's possible to purchase a century-old house and eventually long to live in a cookie-cutter home that looks like every other residence on the block. As Kent Owen, an insurance agent from Silverhill, Alabama, puts it: "Older homes may look nice at first glance, but think of them like a person who has been divorced a few times. You might be able to make it work, but you'll be finding problems from the past in there somewhere."
That might be fine with you, especially if you enjoy do-it-yourself projects. But if you're thinking of buying a century-old house, you want to know what you might be in for and then get out your wallet. These are some issues century-old homes tend to have in common.
Faulty, dangerous or old wiring. Well, here's the good news. If you're buying a house that is 100 years old, the wiring has probably been replaced, says Welmoed Sisson, a home inspector with Inspections by Bob, headquartered in Boyds, Maryland.
Heather Brewer, who has a public relations firm in Albuquerque, New Mexico, says she owns a beautiful craftsman house built in 1919 (OK, just shy of a 100-year-old house), and water issues have often been a problem from the get go.
"Once, as I was cleaning out my desk, my almost-3-year-old son saw my checkbook, pointed to it and said, 'That for the plumber.' Literally, the only time he ever saw me write checks was to the plumbing company," says Brewer, whose son is now almost 4 and likes to pretend he's a plumber when he plays with his toys.
"Most old homes only have a single bathroom. Having multiple bathrooms in a house is definitely a modern creation," says Rob Williams, a real estate agent at DC Home Buzz, a real estate brokerage in the District of Columbia.
Sagging floors. It isn't an issue you would typically think about, but you'll find it in a lot of old homes, says Tracy Abriola, a marketing and communications professional who lives in Philadelphia. She and her husband, a real estate agent, are living in her second 100-plus-year-old house.
"It came as a pretty big surprise when we noticed our room ceiling heights aren't the same," says Keinaenen, who is still renovating. "But also, the floor height between one side and the other vary, too, due to one part of the house having been a porch at some point. So our master suite will have odd steps, ups and downs. That's all part of the charm, we hope."
Even landscaping issues. That's right. Your old house may have problems beyond the house. If there are 100-year-old trees near the home, for instance, those may need serious pruning or need to come down, Abriola says.
Of course, none of this means you shouldn't buy house that's a centenarian. It does mean that if you're looking for a starter home, make sure your 100-plus home has been maintained well over the years, or be prepared for a lot of updates.
The average interest rate for the benchmark 30-year fixed mortgage reached 7.08%, as of Monday. However, with the economy expected to cool and possibly dip into a recession, many recent forecasts expect rates to drop to 6% or below in 2024, including a Fannie Mae projection of 5.2%.
Meanwhile, home prices continue to weaken and are already down 2.7% from their June peak, according to the S&P Case-Shiller home price index. Forecasts are a mixed bag, but most expect prices to either remain flat or continue cooling by 1% to 10% from 2022's highs.
Despite forecasts of lower mortgage rates in 2024, don't expect them to bottom out to the record lows of the past decade, either, says Lawrence Yun, chief economist at the National Association of Realtors."Returning to mortgage rates of 3% or 4% is not going to happen, in my view," says Yun, who points out that historically rates have been higher. The low rates of 2020 and 2021 were "unique" and those that got them were "lucky," he says.
As for home prices, a price correction is largely expected to be short-lived due to a chronic shortage of homes. Declining mortgage rates could also stoke demand, which would likely push prices higher. It's also important to note that real estate trends vary by region, which means that home prices in your area might not drop in either 2023 or 2024.
While professional house flippers might need to worry about short-term fluctuations in home prices and interest rates, regular homebuyers who plan to live in their homes more than five years should be less concerned about timing the market, he says.
Choosing the right home is exciting, but it can be a lot of work. Even with a great real estate agent and a solid understanding of the features you're looking for in a house, locating and reviewing homes takes time and energy.
Your real estate agent should be present at any property you view, so they can get a better understanding of what you like and dislike about the home. They can also answer many questions, as well as give you advice on whether the house is a good fit based on your wants and needs.
If you have a spouse or partner, they should attend a viewing. In some cases, you may decide to go alone to the first selections your real estate agent shows you, then narrow down the options to two or three strong possibilities. Though this seems like it would save time by eliminating homes that are an obvious no-go, seeing these poor fits can help spark important conversations with your partner about what you really want in a home. For that reason, it's ideal for both of you to look at every house.
When attending a scheduled viewing or open house, it's best if you don't bring your children. Younger kids can become bored and need attention at a time when you should be focused on looking critically at each home. Even older children should only look at the houses you deem to be front runners, as they can get excited about features that aren't on your list and then be disappointed that you didn't, for example, choose the house with the swimming pool or the loft in the kids' room.
You should also have a good idea of your preferred locations and stick close to those areas when looking for properties. While you can make updates and renovations to the house, you can't change the neighborhood.
Replacing the roof is a big expense, and one that people expecting to move might put off. A new roof can cost several thousand dollars, so find out if that's needed. A roof in need of repair could also be a problem for your lender, and you may have to negotiate with the seller to replace it before you can get your mortgage.
Sellers are required to report if there could be lead paint in the house. And in some locations, they also need to disclose the presence of asbestos, mold and water or pest damage. If the seller doesn't know, though, they can't be expected to reveal the information. Even if you want to have a specialized inspection that tests for asbestos or other harmful materials, the seller may not permit it. For homes built during the time those materials were commonly used, you may have to use your best guess and resolve to pay if you need to remove these materials. 041b061a72