The U.S. housing market's recovery is gaining momentum, but there are still a number of issues for homebuyers to be cautious of.
To get to the bottom of what's really going on in the housing market, we talked to Gerri Willis, author of "Home Rich" and host of FOX Business Network's The Willis Report (6 p.m. weekdays), about the key things homebuyers need to know in today's challenging market.
With the housing market gaining momentum, a housing market expert and author offers tip on what every homebuyer needs to know.
Here's what Gerri had to say about the true state of the housing market today:
- "Bidding wars are happening in various areas around the country. There is stiff competition out there, but avoid a bidding war at all costs. It mostly results in bad news since your negotiating leverage loses weight. Bidders tend to wind up paying too much and eventually wishing they had made a different choice."
- "Be informed about YOUR market. Simply put, there's not just one real estate market. Every state, city and county can have different dynamics depending on local factors, so don't read headlines in a national publication and assume that applies to your community. If you want to know the future of your own market, here's how to read the local tea leaves. Check out your local employment picture. Are companies still in layoff mode? If people are still losing jobs, it will be difficult for your housing market to recover. That's because people without jobs don't typically buy new homes."
- "Anticipate a challenge when it comes to getting a loan, but that doesn't mean give up. Getting a loan these days is a financial strip search. Be prepared to answer a lot of questions and to document your answers. Banks have been stingy with loans recently but this doesn't mean you should give up all hope. Go into the process with a determined attitude and be prepared to shop around. If you don't like the deal offered by national banks, shop the community lenders. They sometimes have more flexibility to tailor a loan to your needs."
- "Foreclosure activity is ramping up in some places, but be cautious. If you're considering buying a foreclosed home, you need to do your homework here and check out the property first-hand. Homeowners who are forced to leave may bring items with them; for example, I've seen copper wiring stripped from walls and even toilets pulled out of bathrooms. Keep an eye out for vandalism, too, which is harder to spot. It is not uncommon to see concrete poured into toilets. You're setting yourself up for trouble if you pass on an inspection with a foreclosure property. While we're talking foreclosures, a tip to help preserve your home value is to get involved in your community. You can do your part by organizing a neighborhood watch or volunteering to mow the unruly grass of a foreclosed home."
- "A bubble is ahead, though the government might not be warning of one. Take a look at some of the hardest-hit markets during the recession. Prices in Las Vegas, for example, were up 31 percent year over year in April as inventory contracted. It's the same way in many other markets: less inventory, higher prices. The reason the government isn't warning of a housing bubble is because when it comes to inflation, the housing numbers they survey are apartment rents, or"Owner's Equivalent Rent." These are not for home prices and, moreover, the government gets to this number based on homeowners' estimates."
To learn more, tune in to FOX Business Network for a daylong special on Friday, May 10, about the U.S. housing market and its prospects for 2013.