There are some things Lake Minnetonka home buyers need to know about this current seller's market we're in, but it's not all that bleak if you're looking to buy a home.
Although sellers are enjoying an edge with surging prices and tight inventories, it's far from all negative gloom and doom for Lake Minnetonka home buyers.
Positive Factors for Lake Minnetonka Home Buyers
Mortgage rates are holding in the historically low territory, with the 30-year-fixed rate lower than 4 percent for most borrowers with good credit. And new programs from Fannie Mae and Freddie Mac should make it easier for first-time Lake Minnetonka home buyers to buy a home.
To qualify for Fannie's and Freddie's mortgage programs with just 3 percent down, prospective Lake Minnetonka home buyers must have a credit score of at least 620. They must also be able to able to prove income, assets, and job status, and purchase private mortgage insurance.
Overall nationwide, the housing market is favoring sellers. Total housing inventory at the end of February increased just 1.6 percent to 1.89 million existing homes available for sale. For the second month in a row, unsold inventory is at a 4.6-month supply, which is below what is considered normal for a healthy market.
Competition between regular Lake Minnetonka home buyers and investors is decreasing, with home prices climbing and with fewer below-market distressed properties for sale. The share of home sales to institutional investors and all-cash buyers dropped to four-year lows in 2014, despite a quarterly increase in the fourth quarter.
A recent study by the National Association of Realtors found that rents are still climbing. The study also found that renters are spending about 30 percent of their wages on rent, compared to homebuyers who spend below 15 percent of their wages on a mortgage payment.
Despite low inventories, Lake Minnetonka home buyers are picky about the condition of properties for sale and expect homes to be move-in-ready. Buyers don't generally want to assume any risk with properties that need work, particularly first-time buyers with limited cash resources.
So even though it is considered a seller's market, Lake Minnetonka home buyers still have an edge in many categories, unlike many seller's markets we've seen in the past.