Hope is in the air this spring as the economy gains strength, an increasing number of Americans receive vaccines, and post-pandemic life starts to feel within reach. As the weather warms, this sense of excitement and confidence can be felt even in the housing market. Mortgage rates remain at historic lows, while more homeowners begin to put their homes on the market. For interested buyers feeling the onset of spring fever, now is the time to assess whether you’re prepared to enter the market for a home this season.

A Recipe for a Healthy Housing Market

The pandemic drove interest rates down to unforeseen lows, creating an unprecedented opportunity for homeowners looking to refinance and shoppers looking to purchase. Higher levels of confidence in the post-pandemic recovery has caused mortgage rates to gradually increase over the past couple months, but this rise is likely to taper and rates will remain relatively steady through the end of the year. For mortgage seekers, this means it’s not too late to take advantage of the rate environment.

On the other hand, home sellers are reentering the market after months of uncertainty. As the country reopens, many who stayed put out of health and safety concerns may be more willing to open their homes to potential buyers, agents and appraisers, resulting in increased inventory after months of high demand and low supply. Still, homebuyers should be prepared for the residual effects. The imbalance of supply and demand could continue to drive highly competitive buying markets (especially for those looking for lower-cost or starter homes) and escalated home prices.

Moving to a new city?

Where you live has historically been dictated by your job but we’re seeing this change as more and more businesses move to hybrid or remote models. Greater flexibility is likely to continue fueling the city exodus trend, as individuals and families find larger homes at more affordable prices elsewhere — and they aren’t just going to surrounding suburbs. Not only do forty-one percent of workers say they’d be willing to take a pay cut to work anywhere they choose, nearly one-third say if given the choice they would move to another city or state entirely.

And where do homebuyers want to relocate? Where it’s warm. We’re seeing a general migration as many say goodbye to northern and midwestern states, like Illinois, Michigan and Indiana, heading south both for the climate and economy. Cities with fast growing economies, such as Charlotte, N.C., Austin, Texas, and Denver, Colo., are increasingly attracting both companies and employees away from traditionally higher cost metropolitan areas.

Don’t dawdle — but don’t rush

If you’ve assessed your finances (and your down payment funds) and feel comfortable securing a mortgage, it could be worth it to act sooner than later. Because the market is healthy and competitive, home prices are appreciating at a fairly rapid pace and will likely continue to do so for the next couple of years. As interest rates also slowly rise with the country’s reopening, you may be able to get more buying power with your dollar today than you could down the road. For example, you could potentially buy a $250,000 house today borrowing at around 3.25% interest or purchase the same property in three years for $300,000 at a rate of 4%. Given the choice, option one makes more sense.

With so much buzz in the homebuying market, it may feel like if you don’t capitalize on currently low rates ASAP, you’ll miss out. But remember: Mortgage rates are unlikely to shoot up overnight or even in the next several weeks or months. It’s more important to be confident you’re both financially and mentally prepared to take on the role of a homeowner, rather than purchase with haste just to score today’s rates.

Prepare for a competitive housing market

Heading into this homebuying season, shoppers should expect to face some competition. While more homes may be for sale than they have been in the past year, demand will still outweigh supply — especially for those in the starter home market. That makes preparation within the homebuying process essential.

Do as much homebuying “homework” as you can, in advance. Start by researching and comparing lenders based on criteria like rates, fees, digital tools and customer service. And once you’ve selected a lender, go ahead and get pre-approved. You’ll get the bulk of the paperwork out of the way and be a step ahead once you’ve found a home and are ready to make an offer.

The key to scoring the keys to your dream home this year is being intentional throughout the homebuying process. Don’t buy because you feel pressured to do so. Be sure you’re financially ready to handle the upfront costs of owning a home and have a stable income that will support you in the long run. Don’t be afraid to explore new areas available to you now if your work situation has changed. And remember, you don’t want to wait until the last minute to think about your mortgage lender. Instead, try to make it your top priority so that you’ll already be prepared if and when the competition heats up.

Ally Home makes your mortgage pre-approval quick and easy.

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Speech bubble icon next to text "Expert Take"

Headshot of Glenn BrunkerGlenn Brunker is the president of Ally Home, responsible for leading the growth of Ally’s mortgage business. He has oversight of both the direct originations and bulk acquisition businesses as well as the responsibility for the servicing platform. He also leads the secondary marketing and business line risk functions.

Glenn has extensive executive experience in leading banking operations, secondary marketing, production channels, and all key risk functions. Before joining Ally in 2018, he held several leadership roles in financial services at Bank of Oklahoma Mortgage, Fifth Third Bank, National City Bank, and Oak Street Mortgage.

Glenn is a native of Chicago, Illinois with a bachelor’s degree from Northern Illinois University and an MBA from DePaul University. He has since left the Midwest and currently lives in Charlotte, North Carolina.