Consumers seeking a bargain American Dream had better not wait for the seasonal surge. Ahead of the traditional spring rush to buy homes, buyers were out in droves in January, following a banner year for home sales and appreciation.

Previously owned home sales rose in January by 16 percent (compared to January of 1998) to a record annual pace of 5.07 million, as favorable mortgage rates, consumer optimism and a generally sturdy economy, buoyed by a strong job market, lured ever more home buyers, according to the National Association of Realtors.

The association's forecast revealed an annual sales pace of only 4.95 million for 1999.

Preceding January's sales of existing single-family homes, townhouses, apartment condominiums and co-operatives, nearly-as-hot median home prices rose 4.9 percent to $131,000 during 1998's fourth quarter, a rate well ahead of the 1.9 percent rate of inflation.

All of 1998 was a very good year for home values.

Nationwide, home values jumped 8 percent in 1998, the biggest increase of the decade, according to First American Real Estate Solutions.

NAR's metro area home price report, covering 132 metropolitan areas, shows 16 areas with double-digit annual increases in median existing-home prices and 76.7 percent of the metro areas' median prices increasing at a faster rate than inflation.

"The momentum of the 1998 housing market built on the strength of the 1997 market. We had a record year for existing home sales last year, and we expect strong activity this year ," said NAR President Sharon A. Millett. "Sales have been consistently steady in all regions of the nation, not just in certain areas of the country," she added.

New homes weren't an exception.

Sales of new single-family homes reached 888,000 in 1998, the highest number ever recorded for a single year, according to the U.S. Department of Commerce.

"Buyers took advantage of the best housing market conditions in memory--low mortgage rates, a strong economy and stable prices. As a result, home sales soared to a record level and the national home ownership rate reached an all-time high of 66.3 percent," said Charlie Ruma, a home builder from Columbus, Ohio, and president of the National Association of Home Builders (NAHB).

Like resales, every region in the nation enjoyed new home sales gains for 1998.

Dr. Fred Flick, NAR vice president of economic research, said 1998's economic conditions should continue to entice consumers nationwide into buying homes.

But they'd better hurry.

"There are some shortages of homes available for sale in many areas, and that is a factor in rising prices. Historically, we see price increases of one to two percentage points above inflation - now we're almost three points higher than the inflation rate," Flick said.

Here's how to beat the spring rush.

Wise Up.

Attend real estate agent, broker, title company, and lender-sponsored seminars and workshops, community college classes and other educational opportunities to learn more about buying a home. Web-based resources of real estate information include the Buyer's Guide at RealTimes.com, Realtor.com, and the best seller tome "Home Buying for Dummies" (IDG Books, $16.99).

Hire The Best

Don't go home shopping alone. Your most valuable asset is a real estate agent. Ask family, friends, co-workers, neighbors and others you trust and who've recently worked successfully with an agent to give you referrals.

Get Preapproved

Don't bother with prequalifying. That only tells you what you can afford. Preapproval (in writing) guarantees you a fixed amount. Sellers appreciate it when you show them the money.

Clean Up Your Act

Check your credit report for any blemishes you can fix. Forget major purchases for now. Store credit cards. Pay off debts or retain those that aren't burdensome, depending upon how it might affect your credit score. Get any gifts, stock money, or loans locked in before you make a bid. The seller not only wants you to show him or her the money, he or she wants to see the cash in the pipeline, not as a pipe dream.

Create Reserves

In a seller's market, expect to pay closing costs, inspections and other fees a buyer's market wouldn't demand. Be prepared to offer more than the asking price if multiple offers stiffen the competition.

Show The Seller Only Some of The Money

Bid in good faith, but work with your agent and lender not to reveal more than necessary. Your cash is your negotiating edge and you don't want to spend a dime more than necessary.

Buy Only What You Can Afford

Mortgage lenders will lend you the universe. Some real estate salespeople will tell you a home is worth what someone is willing to pay. The home may be worth what you pay, but only at the time of purchase. Markets skyrocket and markets plummet. Be realistic about the mortgage payment you can handle in any economy.

Don't Fall In Love

Get emotional about a home and you lose objectivity. Get your agent to gather comparables to prove what a home is worth. Get rid of real estate salespeople or lenders who pressure you to take action. You are in charge of what could be the most expensive purchase you'll ever make.

Be There

Don't wait for weekends to shop. Use lunch hours, early mornings, after-work hours and other times to search or to respond to calls from your agent. Stay flexible with your time and choice of home and community.

Published: March 5, 1999

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