Be patient. Hang in there. Keep trying.
In one form or another, that's the advice some real estate experts give buyers in dealing with this overheated housing market.
Yes, it is a good time to buy in terms of house prices and mortgage rates. If you find a good house at a good price and a loan at a good rate, go for it.
But the inventory of available homes for sale is extremely low, for any number of reasons.
In many markets, regular buyers are competing with investors who are willing to pay cash to turn properties into rentals. At the same time, some home builders are "metering," or constraining sales, to take advantage of rising prices. That's one reason that the inventory of new homes is at a 30-year low.
Even the number of distressed properties has shrunk because lenders are slow at processing foreclosures. And on top of all this, the expected rush of pent-up sellers who were thought to be waiting to put their places on the market hasn't materialized.
Yes, this is a seller's market and the typical buyer is at a disadvantage. Some buyers are being rushed to make decisions, which can quickly lead to remorse over paying too much for a house. Or the place's condition may not be as good as expected.
Hence the admonition: Take your time.
"It is important to stay patient," said Svenia Gudell, senior economist at real estate website Zillow.
And don't get "over-invested" or obsessed with just one house, "because a lot of times," Gudell said, "you'll get involved in a bidding war. It gets so crazy that [some buyers] end up at a price they aren't comfortable with."
Six months to a year from now, as the market shakes out, the inventory of unsold homes should improve markedly, experts say. Investors probably will have left the market at that point. Financing may be a little more expensive, but it should be somewhat easier to qualify. And appraisals may not be the deal breakers they are now.
For now, the housing sages say, leave the market to local and Wall Street-backed investors, who are driving prices up in many places because they are willing to pay more than list price.
It may seem counterintuitive, but that may actually help buyers in the longer term, said Rick Sharga, executive vice president at Auction.com.
Although investors are accelerating the housing recovery, Sharga pointed out that appraisals generally trail rising values, a fact that borrowers discover when the valuation on the property they intend to purchase comes in too low.
At the same time, cash buyers are resetting property values every time they buy a house. And as comparable property values reset, borrowers will be able to obtain a higher-value loan on subsequent sales. "It will make it easier for them to compete," Sharga said of patient purchasers.
Once prices reach a point where it doesn't make sense for the big investors, they will move on to other markets. But "they are not causing a bubble," the longtime mortgage industry executive added. "The [higher] prices are sticking after they leave the market."
In the midst of this strange market, buyers need to be patient for one more reason: It is going to take some time for the inventory of homes for sale to reach more normal levels. Lawrence Yun, chief economist at the National Assn. of Realtors, said it may take two years before that happens.
Currently, according to many sales indices, prices are rising at an annual rate of 10% or so. But Yun expects sales and prices to moderate next year.
"It will be less hectic," the economist said, noting that buyers should not be hurried into undertaking such a large financial transaction as buying a house.
"This time next year, there will still be a shortage in inventory but not the degree of tightness we have been experiencing. It will provide consumers with additional time to make that decision," Yun said.
That doesn't mean you should stop looking. If you are not turned off by the current state of things, Joan Patterson of Keller Williams Realty in Rancho Cucamonga is one of many realty pros who suggest that you need to be persistent. "Be ready, willing and available to look at homes" as soon as they hit the market, she said.
Steve Bachman of RE/MAX Gateway in Chantilly, Va., noted that it has become the norm for buyers to make several offers on different properties before one is accepted. "Buyer patience combined with a willingness to act decisively when the right home becomes available is critical in today's challenging market," he said.
Lastly, there's this reminder from Don Kanare of ReMax Premier Properties in Reno: From time to time, a peach of a listing comes on the market — perhaps because of a divorce, death or job change.
"Every year, buyers who are patient and monitor the market will find a certain amount of new listings in each price range that are superb values," Kanare said. "Being patient and waiting for the rare gem to come on the market is only half the battle. Equally critical is being decisive."