Homebuyers in 2024 may find some excellent opportunities despite higher mortgage interest rates and a pesky lack of inventory. The brutal competition of recent years has settled to more reasonable levels, and as a result, Bakersfield home prices have softened a little and homes are remaining on the market longer.
Last the last few years were insane. Buyers had to accept whatever they could get, but now they can take a minute to think about offers.
This post will shed light on what to expect when buying a Bakersfield home in 2024. The article will also discuss the advantages of being a first-time home buyer, current housing market trends, questions to ask, and the home-buying process. Further, we’ll add tips for buying and settling into your house.
Benefits of Being a First-Time Homebuyer
Although a house is usually an appreciating asset that increases in value over time, it’s also seen as a dream for many. If you are a first-time homebuyer and don’t qualify for a conventional loan or don’t belong to a qualifying group, you may be eligible for tax credits and government-backed loans. Yet even if you aren’t a new buyer, you may still be able to take advantage of the first-time buyer program.
If you’re a first-time buyer, you could also qualify for programs designed to help with a down payment or closing costs. These programs, which may be sponsored by either a state government or a nonprofit organization, can help you save for a down payment and cover other closing expenses so that you can finally buy a house of your own.
Qualifications of First-Time Homebuyers
You might be wondering who is a first-time homebuyer. A first-time homebuyer is someone who meets the following criteria laid down by the U.S. Department of Housing and Urban Development (HUD):
- A person who, for the past three years, hasn’t owned a permanent house. You and your spouse can buy a property as first-time buyers if either of you has previously purchased a home but the other has not.
- A single parent who has never become a homeowner on their own but has done so with a past marriage.
- A woman who has only ever owned a home with her husband and is now homeless.
- One who, in compliance with the law, has only ever possessed a primary home that is not permanently attached to a foundation.
- A person who has only ever owned property that did not meet state, municipal, or model building regulations and would require more money to bring up to code than would be spent on building a permanent structure.
- With such a broad definition, you may now find it easier to meet the requirements for first-time homebuyer status and gain access to the many perks connected with this milestone.
Current Trends in the Housing Market
Naturally, trends in the housing market change over time. Until interest rates jumped above 6%, buyers had no room to negotiate. It was a “take it or leave it” environment. Currently, depending on the house, buyers have some room to think and negotiate with the seller.
Home Prices Flattening
Even though house prices have increased substantially over the last three years, experts think they will stay the same. The median price of an existing house in 2024 is expected to be relatively flat compared to 2023, according to the National Association of Realtors (NAR), a significant slowdown from the 9.6% annual increase in 2022 and the stunning 18.2% increase in 2021.
Existing homes are those that have already been purchased and lived in. After rising by double digits in 2021 and 2022, and up slightly in 2023, the NAR predicts that new house prices will increase by 2.6% in 2024.
The National Association of Realtors (NAR), indicated that the housing market in the United States may experience a mixed trend of modest price increases and decreases. Approximately half of the country’s housing markets may see a slight uptick in prices, while the other half might see declines.
Some areas like San Francisco, might be an exception because prices there might go down by 10 to 15%. So, it’s important to keep in mind that while home values may go down in some areas, they may go up in others.
In some markets, the number of houses for sale has gone up, but there is still a lot of competition for these homes. As of the end of 2023, there was a 3.6-month supply of properties on the market, which means it would take just over three and a half months at the current sales rate to clear the market. The supply in October 2021 was only enough to last for 2.4 months, while a competitive marketplace has a supply that can last for roughly 5–6 months.
The volume of existing-home sales has plunged thanks to a lack of inventory and affordability. From 2022 to 2023, transactions dropped nearly 15%. Sales are now at their lowest levels since 2010, according to data from the National Association of Realtors (NAR).
Buyers Have More Negotiating Room
Unlike a year ago, sellers no longer have complete control. It’s still a neutral market in some regions, but it’s shifting in the buyer’s favor. Bargains may not be plentiful yet, but they’re a possibility.
Although sellers still have an advantage in some areas, buyers are sticking to their guns elsewhere. For example, very few buyers are skipping home inspections in favor of making higher offers, as many did last year. Much more common in Bakersfield, buyers might be able to negotiate with the seller to cover part of the closing costs.
It’s still a seller’s market, with houses priced well and in good condition moving quickly. On the other hand, some listings are staying on the market longer than usual, and high-end homes are receiving fewer bids. Homes that may have garnered 8 offers a year ago are hoping for at least one good offer. Times are changing again and buyers can negotiate once again.
Mortgage Rates Stabilizing
The average mortgage rates on a 30-year fixed mortgage more than doubled from 2022 to 2023, from less than 3% to over 7%.
Recent predictions from Fannie Mae, Freddie Mac, the Mortgage Bankers Association, and the National Association of Realtors have placed the 30-year fixed mortgage rate in the range of 6.1–7.6% in 2024.
In 2023, the Federal Reserve continued to raise the federal funds rate in an effort to slow inflation, but future rate changes are anybody’s guess. If the economy shows signs of decelerating, the Fed will likely cut interest rates. Slowing inflation, a weaker jobs market, and a sagging outlook for consumer spending may force the Fed to cut interest rates more aggressively than projected.
Read more: How to Navigate a Mortgage Interest Rate Buydown
Questions to Consider Before Buying a Bakersfield Home
The first thing you need to do is think about the big picture and how buying a house fits in with your plans. You may just want to stop “wasting” your money on rent and start building real wealth with a mortgage. Or perhaps the idea of having your own home appeals to your sense of independence, making homeownership a desired goal.
Purchasing a house also has the potential to be a significant financial move. Defining your long-term plans for purchasing a house will help you get started on the correct path. You should think about the following six questions:
1. How’s Your Financial Health?
Before you start browsing for homes, it’s important to assess your finances. Save up for a down payment and associated costs, and make sure you have three to six months’ worth of living expenses in an emergency fund. Consider keeping your funds in a secure, accessible vehicle that generates a return, such as a CD or high-interest savings account.
Monitor your expenses to determine how much you can afford to spend on a mortgage payment. Also, check your credit and ensure that your debt-to-income ratio is no more than 43%. Mortgage payments, including taxes and insurance, should not exceed 30% of your monthly gross income.
2. Which Type of Home Will Best Suit Your Needs?
You may buy anything from a single-family house to a townhouse, condominium, or multifamily property with two to four units. As a homeowner, you need to think about the pros and cons of each type of property to figure out which one will help you best reach your goals. If you want to save money, a fixer-upper could be a good opportunity; however, you may discover that the time, sweat equity, and money required to transform your dream house is more than you bargained for.
3. Which Specific Home Features Do You Want?
Even though some of the things on this list need to be flexible, you shouldn’t settle for anything less than a perfect fit between your new purchase and your wants and needs. Provide anything from size and location to more specific preferences like bathroom design and a kitchen with quality appliances. You may get a feel for the market value and availability of homes with the amenities you care about most by browsing real estate websites.
4. What Mortgage Do You Qualify For?
Find out the maximum mortgage that a bank or other financial institution is willing to approve before you begin looking for your first house. Lenders will look at your credit score, the amount of debt you have, your monthly salary, and how long you’ve been at your present job to determine the mortgage amount they approve. Because of this, many real estate agents don’t want to work with clients who haven’t been pre-approved for a loan.
Before making an offer on a house, it’s a good idea to see whether you can secure a loan. A mortgage pre-approval is often required before sellers will even consider an offer. One way to accomplish this is to apply for a loan and finish all of the required paperwork. It’s in your best interest to use a mortgage calculator or a search engine to browse for a lender and evaluate interest rates and costs.
5. How Much Can You Actually Afford?
A bank may provide you with a loan for a bigger home than you are comfortable paying for. The fact that a bank is willing to loan you $300,000 is no guarantee that you should really borrow that much money. Many first-time homeowners make this mistake, making them “house poor” and unable to afford basic living expenses like food, clothes, and transportation after making their mortgage payments each month. Inflation is making this even more important.
When calculating how much of a mortgage to get, it’s important to include the full price of the home rather than simply the monthly payment. Think about how much you’ll be spending on things like mortgage payments, homeowner’s insurance, closing expenses, and improvements or maintenance over the course of a year.
Looking for a home on a budget that is less than the amount for which you have been preapproved can give you a competitive edge in the market and provide you with greater financial freedom in general.
High prices for housing and a lack of available houses result from a supply-and-demand imbalance. Purchasing with some room for increase might save you from losing out in a price war on your ideal home.
6. Who Will Guide You Through the Home Buying Process?
Consulting with a real estate agent and a mortgage lender can allow you to look at properties that fit your criteria and are within your price range.
After you’ve settled on a house, these experts can help you through the rest of the purchasing process, from placing an offer to securing a mortgage and completing all the necessary paperwork.
When working with a professional real estate agent, you may avoid potential problems. Commissions for agents are typically taken out of the seller’s proceeds.
7. Should You Consider Conventional or FHA Loans?
When considering home financing options, it’s important to weigh the pros and cons of conventional and FHA loans.
Conventional loans are a popular choice among home buyers as they offer low down payment options like FHA loans (as little as 3% of the purchase price) but the interest rate is usually superior.
On the other hand, FHA loans backed by the Federal Housing Administration are often less risky for lenders, which makes them appealing to those with less-than-perfect credit. In fact, credit score requirements for FHA loans are more relaxed than those for conventional loans.
Before making a decision, it’s important to assess your financial situation and determine what you can afford. You’ll need to compare the interest rates, terms, and fees for both types of loans, as well as the monthly mortgage payments for each.
Keep in mind that conventional loans typically require a stellar credit report, while FHA loans have more lenient credit requirements but require mortgage insurance premiums to be paid throughout the life of the loan. Ultimately, the best choice for you will depend on your unique circumstances and financial goals.
The Home-Buying Process
Buying a home might seem easy; however, it can be tedious to follow a proper process and remain resolved while juggling your home search and your normal routine. The home-buying process is discussed below in detail.
Pre-Qualification and Pre-Approval for a Mortgage
Even if you are only eligible for one type of loan, shopping around for a mortgage pre-approval is in your utmost interest. Also, the range of possible costs might vary among lenders.
Fees associated with a Federal Housing Administration loan, for instance, might vary based on whether you go through a small community bank, a major bank, a mortgage banker, or a mortgage broker. Mortgage interest rates, which naturally have a large influence on the overall cost you pay for a property, are also subject to change.
After you choose a mortgage lender and complete an application, that company will carefully check your reported income and other financial information. Lenders often provide borrowers with preapprovals for loans of specific amounts. Be cautious to avoid activity that might impact your credit score, like financing a vehicle purchase, since your loan pre-approval could be revoked at the last minute.
Finding the Right Real Estate Agent
Finding the right real estate agent is essential, as the agent will negotiate the price and terms with the seller or seller’s agent. Look for the best real estate agent. Moreover, never choose the same real estate agent that the seller has chosen.
Searching for Homes that Fit Your Criteria
Focus on your criteria to narrow down what type of home you are looking for. A real estate agent can be your best resource to find the perfect home. Further, websites like Property Wonk can help you find your ideal home.
Making an Offer and Negotiating with the Seller
Your real estate agent will guide you through the process of making an offer and negotiating with the seller. Your agent will make the offer and negotiate the price and terms with the seller. The agent will interact with your lender about your financial condition and discuss each aspect with you before he negotiates with the seller.
Understanding the Closing Process and Closing Costs
It’s evident that the purchase price of a home is not the total cost. You will have to pay 2 to 5 percent of the purchase price as closing costs. Closing costs depend on your market and the purchase price. You will need to pay the home’s purchase price and closing costs to close the deal with the seller. Your real estate agent, escrow agent, and lender will help you close the deal with the seller.
Read more: Realtor vs Real Estate Agent vs Broker: What’s the Difference?
Tips for Buying a Bakersfield Home in 2024
When buying a house for the first time in 2024, you will need professional tips, and that’s what we’re here for.
1. Working with an Experienced Agent
Finding and working with an experienced real estate agent is crucial, as the agent is going to help you from soup to nuts, and with items you wouldn’t expect. An experienced agent knows how to deal with the seller and listing agent, and negotiate contract terms, prices, clauses, and much more. He will send the formal offer and close the deal, helping you buy the house.
2. Researching the Local Housing Market
Before you act, make an offer, or commit to a purchase, be sure to research the local housing market. Check the larger market trends and the local market in which you are going to buy the house; analyze the total costs and history of the local housing market.
This will help you, as nothing will be new for you and you won’t find anything difficult. You can research your local housing market online or consult a good real estate agent.
3. Understanding Your Budget and Financial Limitations
Make sure you understand and plan your budget before you fall in love with a house. You should realize your financial limits before embarking on your home search. Also, if you are having trouble paying your bills, you should inquire about first-time home buyer programs with low-down-payment mortgage loans.
4. Being Prepared to Act
Housing markets change quickly due to economic conditions and other factors. When buying a house in 2024, you should act quickly, backed with wisdom. Take your time and make educated decisions.
During the negotiation period, act quickly on the tasks at hand, negotiate with alacrity, and reply to the seller according to set deadlines. You can then reach timely solutions and avoid wasting time.
Settling into Your New Home
Before you celebrate the new home, here’s a quick last step you must follow. Consider the below-mentioned points, as they will help you settle into your new abode.
- Preparations for moving in: Prepare for moving in, set up security cameras, get the house cleaned, disinfect the house, set up utilities, and make necessary repairs.
- Furnishing and decorating the home: Set up your furniture, touch up the paint, decorate it, arrange the space, and make your home look inviting.
- Know your neighbors: Now that you’re in a new place, meet new people, join new groups, make new friends and socialize!
- Adjust to the new environment: It may take time to adjust to your new setting. Explore your surroundings and embrace the change.
Final Words
In the ever-changing world of today, buying a home requires careful thought about many variables, so it’s important to know how to tackle the process in 2024. This post tells you what to expect, how the market is changing, how to buy a home, what questions to ask, and how to get settled in your new home.
Visit Property Wonk to master the home-buying process.
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