Everything’s dead and flat in the housing market these days because nobody is buying and no one is selling. The homes are just sitting patiently! But the insanity of 2022 is slowly morphing into something closer to reality. The future looks much better for first-time home buyers as we head into 2023 because the buyer power is back. No matter where you are in your planning or home-buying journey, waiting is the worst thing you can do as the market shifts. You don’t have to buy next month, but the longer you plan and prepare, the sooner you can be ready to buy with more options. Or you could wait, all with everything already prepared! Tune in to this episode and learn the best way to navigate the current real estate climate.
Buyer Power Is BACK! – Prepping For 2023
First-Time Home Buyers Preparation Plans For 2023
Everyone, I tell you never to listen to the clickbait headlines because many of them are skewed and not accurate interpretations of the facts and the data. Instead of saying, “First-time homebuyers, have you heard the news?” Now, what I’m going to say is, “First-time homebuyers, have you heard the actual data that people are twisting to make headlines clickbait, but might be revealing some intriguing information if you understand what it really means?” Ladies, gentlemen, boys and girls, 2023 and buyer power is back. It’s only going to get better as we move forward. Let’s talk about it.
I have some very exciting news for you as we close out 2022. Two things, first of all, the numbers are coming in and the return to normalcy is upon us. While the economic world around us freaks out with gas, food, inflation, recession, and doomsday talk, the housing market has decided at the end of 2022 to start to go back to normal. Normal means that the end of 2022 is a great time for you to start planning as it gets better and better into 2023. The second thing that’s interesting about the end of 2022 is this is about three and a half years of the show, and the revolution is growing to over 850,000 downloads at this point.
In the next few episodes, keep your eyes peeled and ears open. Basically, be on the lookout for a big announcement coming for 2023 for all of you. Was that enticing enough? Let’s get into the details and the information that you came here for. We’re going to talk about four topics that are going to mean more buyer power. This is happening in 2023.
Here are the four topics. 1) I’ll give you a quick market update on the numbers and what they mean. 2) We’ll talk about down payment assistance and seller credits. Down payment assistance and seller credits are starting to peak their heads out. We’re seeing it happen and it’s working. 3) A super bonus tip that you don’t want to miss because it’s going to help the nasty P-word, planning, become much more tolerable and fun. You don’t want to miss that one. We’ll wrap it up with 4) Some specific things that you can do to prepare, starting now.
No One Is Selling, No One’s Buying Homes, And Homes Are Sitting
November 2022, what’s going on in the housing market? Nothing is happening. We are at an absolute standstill right now. No one is selling or buying homes, and homes are sitting. What does that mean for you? This means things are going to get back to normal. Things are dead and flat right now, but we were at such a crazy pace. We had to release the pressure cooker at some point. We had to stop this post-pandemic run eventually to release that pressure cooker so it doesn’t explode and we get the crash.
The reason we’re at the standstill is we’ve got the combination of inflation worries. The 7% interest rates are changing everybody’s spreadsheets. That means we’ve got buyers with the inability to afford a lot of the homes and then for the sellers, this hasn’t been happening long enough for them to figure out what’s going down. They have a massive unwillingness to reduce their prices. All that together means nothing. It’s just standing still.
What’s crazy is the activity is slowing down at this time of year because of all this. We need to add that on top of the usual slowdown we have for the holidays. Usually, at this time, we do see a semi-stalemate where no one does much because no one wants to jump into this during the holiday season unless it’s serious, but this year we have that double compounded.
This whole slowdown thing is going to seem extremely weird to anyone who has been paying attention to the housing market since the pandemic or even if you were paying attention a few years before the pandemic up to now. That’s because the housing market has been a freaking Tasmanian Devil, head-spinning furious activity for years. Now, all of a sudden, everyone slammed on the brakes.
Don’t let this slowdown freak you out. This is not weird. This is not going to be a crash. In fact, this time of year, this slowdown is not even abnormal. As far as where we’ve been going and our predictions of what was going to happen, this is a necessary slowdown to get back to normal and it’s good for you first-time homebuyers.
Did you know that in a normal housing market, the average time it takes to sell a home is anywhere from 4 to 6 months? That’s the way it normally goes. Six months to sell a home is considered stable and normal. I’ve been doing this for many years, and that’s been normal for most of the time that I’ve been working in real estate.
If it’s in a buyer’s market where you have all the power, sometimes it could take up to a year for a home to sell. If you’re brand new and thinking about buying a home, you weren’t thinking about this 8, 9 or 10 years ago. You don’t know what a normal market is. It’s not a big deal. You just haven’t been paying attention long enough to understand what a normal market is.
Here’s what the numbers say about it now. Prices are down 2.6% since the end of June. That’s an average of $11,500 for the median home price across the country. Keep in mind, it’s down by 2.6% and everyone is freaking out about that, but prices were up 30% to 35% since the start of the pandemic. If this stands still continues, that means the prices are going to keep moving and the buyers are going to get more and more power.
[bctt tweet=”House prices have been up 30%-35% since the start of the pandemic. If this continues, the prices will keep moving, and the buyers will get more and more power.” via=”no”]
Here is where the numbers get funky. This stands still is happening right now, but only now when rates hit 7%. Interest rates doubled from 3% to 6% at the beginning of the year from January to April, and people still kept buying homes. In fact, we’re still on pace to be the second-highest number of homes sold per year in 2022, the year that mortgage interest rates doubled. It’s something that should have absolutely tanked the market, but it didn’t.
Mortgage rates right now are hitting up to 7% and mortgage rates doubled where we started for 6 or 7 months of 2022. Only in the last couple of months are we starting to see a slowdown when it went from 6% to 7%. We should have been slowing down way before that. Some of the slowdowns we’re seeing right now have a little bit more to do with the traditional holiday. It’s slowing down then just going from 6% to 7%.
What does that mean for 2023? It means that last year when interest rates went crazy, we still saw people fighting for homes, which means demand is still going to be high for a very low inventory. Right now, while things are all sitting at a standstill, the sellers will have to compromise if they’re still on the market at the beginning of 2023.
Who knows, maybe we come back to the beginning of the new year when everyone is all ready to go and interest rates have dropped a little bit. You might start to hear stories about mini bidding wars, not the giant bidding wars that happened way over list price with the sellers demanding no inspections before they even look at an offer. Right now it’s a dead time, which means eventually, it’s going to pick up a little bit. All the more reason for you to start planning right now.
Some of the fun things are going to be coming back for buyers, so more power to you. In a regular market, you could take your time and shop around and look for the right home. You didn’t have to put an offer down the first nineteen minutes that you walked into a house because there were 47 other people right there with their offers in their hands. Not to mention the fact that the seller might be willing to give you a credit for the home. Seller credits are back.
Down Payment Assistance
Ladies, gentlemen, boys and girls, a normal market also means the return of seller credits and down payment assistance. There have always been local and state grants and assistance programs available for first-time homebuyers. The problem was that in recent years if you attached that stuff to your offer, your offer would have gone to the bottom of a gigantic pile when the bidding wars and competition were off the charts.
I can tell you what’s happening right now, I’m talking to the unicorns all over the United States and Canada, and there is no pile of offers happening when a home goes on the market. As long as you present your offer with a great unicorn professional realtor and lender who can prove that your down payment assistance offer is as viable and credible as somebody coming in with 20%, 30%, 40% or 50% down, which can be done with the right support team, then your offer is no longer going to the bottom of the pile or even worse into the trashcan. In fact, it may be the offer that the seller is looking for to get this home off the market so they can move on.
The big question is how do you find out what’s available to you, what you can qualify for, and which down payment assistance grants and programs are available to you? The best way to do that is by using this little tip that I saw on Instagram the other day. This is for real. I’ve been saying this for years, so I was super stoked to see that somebody else was on Instagram preaching the revolution tactics.
Fun Tip To Keep You Motivated
This is a spicy fun bonus tip that’s going to help relieve some of the stress of the buying process for you. I’m going to give you this fun tip to keep you motivated and inspired before I give you all the practical tips. Don’t get crazy and think that shopping and looking at homes is step one. It’s not, but this is a little tip to keep you pumped up. You can use this tip to get your answers on down payment assistance, but the real fire in this giant insider tip is that I’m going to help you balance out the anxiety and the stress involved with saving for a house and trying to manipulate your numbers so some lender will tell you that you’re worthy of buying a home.
I’m going to give you some of the fun stuff. This is the secret sauce. It’s going to balance the process out by introducing you to a safe version of Zillow porn. You’ve heard me talk about it before. It was a great skit on Saturday Live during the pandemic where people were locked in their houses and watching Zillow like it was pornography. I happen to know that that goes on pre, post, during, and any time, not just pandemic. Usually, people spend way too much time on Zillow with their own dreaming happening, looking at neighborhoods and homes without the reality check of what they can afford, and what they should be looking at. I get it. I understand, fantasies are fun.
Let me introduce you to the non-fantasy version of drooling over Zillow. I encourage you to do this while you plan. It’s parallel paths of planning. I get it, you’re saving, and that can be tedious and downright disheartening if that’s the only thing you’re doing because you know you need to save before you can even get started. Use this tip to spice up your time in the bedroom, by that I mean sitting under the covers with a bag of Cheetos scrolling through homes, not what you’re thinking.
If you do it right, it’s called motivation and it can give you a nice break from budgeting and saving, and help you keep your eye on the prize. I’ve been telling people to do this forever, but I saw one of my favorites on Instagram, a creator named HerFirst100K. She does awesome financial advice for people. She posted one of her hot tips for preparing to buy a home. She said, “Reach out to a realtor early. Get yourself on an automated portal. This is going to be an automatic link to the MLS design specifically for you. It’ll be your own personal automated fat-gathering funfest of window shopping with a purpose.”
I told you it’s safe Zillow porn, except it’s not Zillow. This is a step that I talked to you guys about, but I haven’t gone into the details because I don’t want you to put the cart in front of the horse. In this case, if you throw a couple of unicorns in instead of a horse, then you can hit your wagon and join the fun. Here’s how you free porn. You get a unicorn realtor and they’re going to be stoked to help get you to a unicorn lender. You then find out what your numbers are now, and if you’re not where you want to be, you make a clear guided path to saving and planning, whether that’s for 1 month, 3 months, 1 year, or anywhere in between.
[bctt tweet=”If you want to be somewhere else, make a clear, guided path to saving and planning. Do this for a month, three months, a year, or anywhere in between.” via=”no”]
In the meantime, you can ask your realtor, “This is our goal. We’re going to follow the steps with the lender. Can you set us up on one of those MLS automated searches? We promise we’re not going to call you every day when we see a home that we’re still six months from saving enough money to be able to buy, but please can we look at all that stuff?” It’ll be fun. It’s like home shopping foreplay. You’re automatically going to get notified by your support team that wants to help you work out your plan.
This is going to be the automated portal that’s going to help you look at all the neighborhoods that you’re scoping out within the target price range and based on a real plan that you’ve set up with your unicorn support team. This will help you better understand all your budgeting and maybe even increase your budgeting because it may change your wants and your needs, or it may take you back a little bit and give you a little slap of a reality check.
You can narrow or widen your search while you plan. You may even change course if you’re not seeing exactly what you want in the area you thought you were going to find it. It’s a great way to ask questions too since the team knows and understands your timeline. No one is being unrealistic. It’s not going to be a high-pressure situation where you feel like you can’t ask the realtor and the lender a question because they’re going to be telling you, “This is great for you. Let’s go. Let’s buy a house right now.” See that you’re working with a trusted support team.
The bonus tip within the bonus tip of using an MLS search, asks your realtor to make your automated search show everything. You want to see the active homes, the homes that you could maybe write off if you were in the right position. Since this is dream time, you want to see everything. I would even do this after dream time. You want to see active homes, price reductions, and homes that got under contract. You want to see withdrawn homes and expired listings or the homes that sat on the market and didn’t sell.
You especially want to see sold homes. Sold homes are the keys. This will tell you how long homes have been on the market, how long it took for them to get offers, what offers they ended up taking, and what price the home sold for. This is super important. It’s a great way for you to see how the market is acting and you can watch for trends with days on the market and see what’s selling or not, and how long it takes to sell and at what price.
Besides calling your unicorn support team and getting started, what else can you do to start preparing right now? If you press pause, what could you do right now? In the business world, they always tell you to know your numbers. How do you know what you need to do or not do if you don’t know your numbers? That’s why they say it all the time. It’s the same thing when you’re buying a home.
For the 1,000th time, I’ve been doing this for many years and the thing that I hear the most from first-time homebuyers is, “Sidoni, now that we’ve gone through this, we should have started planning earlier because we could have done this way earlier and not wasted so much rent.” How many times have I said that on the show? Don’t drive without a map. Get a unicorn realtor and a unicorn lender. Have that support team give you the map. Find out exactly where you are now.
Homies, you know I love you, but even the most financially savvy people who have spreadsheets to organize their spreadsheets end up being shocked when they find out that all the good intention planning that they’re doing on their own could have been done exponentially better with a guide. If you’re someone who’s been tuning in to the show for a year and hasn’t reached out to start working with a professional team because you are financially savvy, you’ve been doing this all on your own, do me a favor, hit that rewind button and listen to that again.
The people who start out totally clueless will reach out and get better advice and become better prepared than the people who try to do this on their own for 2 or 3 months and sometimes years. I can hear inside your brain. I hear your wheels turning. There’s a lot of you saying, “I got it. I know my credit score and my debt-to-income ratio. I know how much down payment we’re going to need, and how much closing costs are going to be. I know how to budget. I’m going to work on that on my own because I don’t want to waste anyone’s time. When I’m financially ready, that’s when we’ll reach out and get our unicorn team.” Kiss of death. I’ve seen it happen.
I’m not saying that you’re that smart and can’t do this on your own. I’m just saying that if you reach out to someone, you’re going to have more options. Options are what get you the better deals. Your options can only be expanded when you’re working with someone who does this every single day. I guarantee you, a unicorn team’s going to have more answers than Google. Can you do it on your own? Sure, but would you rather jog 26 miles or would you rather call an Uber and tell the guy where you want to go and have them drive you there with Google Maps, Waze, or whatever app?
The biggest mistake that I see by the smartest first-time homebuyers is trying to do too much on their own before ever reaching out and forming their support team. They don’t want a hard credit pull and I’ve addressed this in other episodes. I’m going to reiterate, in many years of doing this, I’ve never seen anyone get denied on a loan for pulling their credit 1 year or 6 months early, but I have seen numerous people lose their dream home because they waited to talk to a lender.
They were freaked out about a hard credit pull even though they felt that they did everything right and it wasn’t going to be a problem. They go in and get approval right when they’re trying to buy their dream home and they find something there that they could have taken care of if they had gotten pulled earlier. They lose their dream home and can’t present a proper offer.
Again, 2023 is going to be the year of the buyer so let me be crystal clear on this point. As someone who is purely giving away all this information for free, you can do whatever you want. Rock on, use a unicorn, don’t use a unicorn, buy a home, or don’t buy a home, I’m telling you this for free. A hard credit pull, 6 months to 1 year before you write an offer is 2 to 5 points on your credit.
By avoiding that minuscule change in your credit score that’s freaking you out so much, you are going to miss out on options that could save you tens to hundreds of thousands of dollars in what you’re going to be able to do to write a proper offer with the proper guidance. When it comes to credit scores and manipulating your finances, all of it takes time.
Six months to a year is perfect to plan and schedule. It’s up to you, 2 to 5 points on your credit score or tens or hundreds of thousands of extra options. Honestly, is there even a debate there? I gave you all that for free. Take it or leave it. If you take anything away from this preparation episode, take what I said earlier, “The biggest mistake by the smartest first-time homebuyers is doing too much on their own before finding and forming their support team to help give them guidance.”
Here are the things that you can be doing with your team of pros that are going to do it for free because they care about you even if they’re not getting paid until 2024 when you close on the home. Here’s the stuff they can help you with the guidance if you find the right team who’s willing to do that for you. First of all, work on your credit score now. This takes time so start now. This is not a New Year’s resolution. This is something you need to start now, and you can during the holiday season.
The second thing is looking into your debt. Don’t make a fatty payment to reduce your debt. I said to look into your debt. Don’t make huge payments and put all your cash into paying down your debt until you talk to a unicorn pro. You might need some of that cash. It’s one of the trickiest things that happens when you’re trying to figure out what to do when you’re getting ready to buy a house. How much debt do you pay? How much cash do you keep? It’s a balancing act and spinning plates. Make sure you talk to a pro.
Third big tip, you’re going to hate me. I’m going to say the B word. It’s budget. Suck it up and do it. Episode nineteen is the beginning of the seven-part series on how to financially prepare to buy your home. Read that, punch your pillow and pretend it’s me. Trust me, you’ll be so much better when you’re getting ready to buy a home.
The last one, change your mindset and maybe even change your lifestyle to fit that new mindset. According to all the pundits, 2023 is going to be a recession poop show. Changing your lifestyle a little bit to make sure that you’re more focused on saving rather than spending for the next twelve months is a great idea if you’re thinking about buying a house, but if things go to crap, it might be the one thing to save you. Who knows what jobs and work sectors are going to get hit in this next recession? In changing your lifestyle and your mindset a little bit, the best case is you survive, and now because of your new budgeted lifestyle, you make it through unscathed. Now, you have a beefy savings account, and maybe you could look into buying a home.
The worst case is the recession monster drags you upside down and you have a weapon in your back pocket to defeat the monster and get back to Hawkins. It’s a big heavy bag of cash to help cushion your fall when you fall on the upside down, and then you can pick it up and beat them with it to fight your way out. If you’re looking for more tools, all the tips are right there on the financial prep. That’s a seven-part series that starts at episode nineteen. You can go there if you want to go deeper.
If you’re a homie and you’ve heard this all before, take this as a reminder. I don’t say that you can do this in every single episode because I can’t think of a better sign-off. You can do this. The keyword in that sentence or phrase, whatever it is, is doing. It’s time for a mindset change. Do that. Jump into your calendar and put reminders every week and every month on action steps that you can do.
[bctt tweet=”Today’s real estate climate calls for a mindset change. Time to jump into your calendar and put regular reminders on actions and steps you can do to level up.” via=”no”]
I got thousands of people like you with me and they did it. Remind yourself that you can do it too. Make the end of 2022 your time to plan. Don’t let the calendar flipping to 2023 be the impetus and the reason for when you get started. Start right now. Make it happen. Grab yourself a support team. Improve your credit score. Be aware of your debt. Increase your saving with a budget.
Nothing bad can come from doing those steps. Change your mindset. This isn’t a pipe dream or a confusing labyrinth for other more adult and responsible people. I’ve got news for you. If you have a job and you’re paying rent, you’re adulting. How’s that feel? At least you’ve got more hair than me. It’s time to do that adulting smarter. Let’s go.
Recessions are when millionaires make their most money. There’s a saying in real estate investing, “You don’t make money when you sell your investment property for some insane high price because the market has taken off. You make your money when you buy it.” Buying with power is the power that millionaires know about.
Put Your Blinders On
A few more extra tips because the winds are finally blowing in your direction. Friends, don’t let friends use online lenders. The biggest mistake that first-time buyers make is doing too much on their own before forming a team. Put your head down right now so you have options in the future. Put your blinders on and prepare. Something super amazing and opportunity could pop up tomorrow. If you got your blinders on, you might be ready earlier than later, and you can take advantage of it.
A big one, do not be beholden to your lease. What are the odds that your lease ends at the perfect time for you to buy a home in 2023? I’m guessing that the stars aren’t going to align that way. Breaking your lease for a couple of thousand dollars if you can save tens and tens of thousands of dollars because the timing is right, that’s better for you in the long run.
The one I talked to you guys about earlier or the little teaser I gave you. Because I was talking about pornography, I thought it should be a teaser. Get a team early, get on a property porn portal, and dream and fantasize while you’re all working on your credit score, managing your debt, and working with a budget to save. All that you’re doing with the guidance of a professional team. Plus, you have the enjoyment of getting to look at some homes and scroll around and keep your inspiration going.
Don’t be a follower in this revolution right now. Be a leader. Get your options through your planning. This holiday season, if you’re hanging with your friends and family, help others join the revolution by letting them know about the show. If you’re not going anywhere and staying by yourself for the holiday season and trolling the subreddits on first-time homebuyers, give the gift of sharing the show with them. Tell everyone you know about it. I’ve got some big news coming for 2023 and I’m going to be bringing market updates as they happen. I have a good feeling about 2023. It’s going to be a great time for first-time homebuyers and a better time for those who started planning here at the end of 2022. Get on this. You can do this.