How to find a home to buy when inventory is low

In the D.C. region, the situation seems even worse. The supply of homes in January was less than one month locally, according to Bright MLS. But the limited inventory does not tell the whole story.

On any given day there may not be many homes listed as active in the multiple listing service. But those homes are selling in record speed, only to be replaced by new listings again tomorrow, and the day after, and again the day after that. Inventory is going on and off the market at record pace. Nationally, NAR reported properties typically sold within 21 days in December. In the D.C. region, homes sold in a median of 11 days in January, which was 15 days faster than in January 2020.

Home buyers, whether they are purchasing for the first time, plan to move up or to downsize, all face the same problem: how to successfully find a property when their choices are limited. The market is turning over incredibly fast, and that creates opportunity for those who are ready.

Some suggestions for how buyers can handle the current market include:

· Talk to your lender about getting preapproved. Every buyer today must have a fully underwritten preapproval for a loan to compete with other buyers and to be considered by a seller. A prequalification from a loan officer is worthless if you are competing with another buyer who has been approved through underwriting. If you’ve been searching for a home for a long time, be sure to check on when your preapproval expires. Talk to your lender about current mortgage rates and keep current. The mortgage market is moving and you may need to adjust your target price point based on a given day’s rates.

· Work with an active agent with a wide network. Finding out about properties as soon as they’re available and before they’re sold can be a challenge. A real estate agent who is actively searching the market and consistently asking other agents for insight into listings can help you find something before every other buyer also sees it.

· Think about lowering your price range. While many buyers today don’t want a fixer-upper, it’s possible that if you look for homes in a price range just below your recent searches you could find a property that needs some minor cosmetic upgrades or has another flaw that you can fix. You can use the extra money in your home purchase budget to save for emergencies or to spend on home improvements before or after you move.

· Expand your geographical preferences. For some buyers, location is everything. But if you’re not tied to a specific neighborhood or building, you may be able to find more options if you expand your search parameters. You should consider your potential commute, especially in view of your post-pandemic opportunities to potentially work from home. You may find a community that you thought was too distant pre-pandemic now offers what you really want in a home.

· Be open to properties that don’t match your ideal home. It doesn’t make sense to buy a home you don’t like, but you may want to consider an alternative such as a townhouse or smaller single-family home than planned, or even a larger house farther out in the suburbs. Sometimes a townhouse can offer as much space as a single-family home with the features you want. A big yard may be desirable, but if you can entertain and garden a little, a small yard may be enough.

· If you don’t see it on the market today, don’t freak out. There will be more new listings tomorrow. The key is for you to be ready to move fast when your dream home hits the market.

Persistence and patience will be required by buyers this spring in the D.C. market, but you can succeed with the help of a real estate agent, the advice of a lender and clarity in what you want in a home so you recognize it when you see it.

Jon Coile, chairman of Rockville-based multiple-listing service Bright MLS (formerly MRIS), writes occasional commentary on the Washington-area housing market.