The housing market has been anything but predictable in the last few years, with the effects of the COVID-19 pandemic and potential economic recession wreaking havoc on everything from pricing to inventory. But according to real estate expert Kevin Seawright, that doesn’t mean that new home buyers need to avoid the market completely. Seawright recently shared his insights on the housing market for 2022 and what buyers should place their focus on for the long term.
Kevin Seawright is the managing partner of RPS Solutions, a Baltimore City-based firm that is dedicated to helping potential first-time home buyers secure a home they can afford in the neighborhoods they have come to call their own. RPS is an advocate for affordable housing and programs that can help residents remain in their communities while also stabilizing their lives. In spite of the pandemic RPS has continued to take on real estate ventures and turn them around for first-time home buyers in the area along with support to help them walk through aspects of the process including financing, insurance, and maintenance.
As the market begins to slow down, Seawright noted that it is finally becoming a bit more of a buyer’s market, rather than one that favors sellers only. He cautioned that interest rates are one aspect of the home buying process that first-time buyers need to be well aware of, especially in light of market volatility. When it comes to interest rates, “that makes a big difference in payments for first time home buyers. There’s a big jump between seeing 3% just 90 days ago and seeing 6% right now. That really tightens the market up for the actual buyers,” said Seawright.
Seawright also professes a savings and purchase rule for his first-time home buyers who may not be as established in their careers or with a large amount of savings to fall back on. He recommends that they should have an amount of money saved based on what they intend to buy so they never default on payments or get over their head with what they can afford. He also encourages buyers to consider that while they might be making regular payments that can seem daunting, “there’s no more rental or landlord or anybody else.” Seawright went on, “You can only call yourself, right? So it makes a considerable difference in what a buyer can do.” This flexibility can empower a first-time home buyer even in a competitive market because they can fall back on the knowledge that their spending is an investment for the long term and the opportunity to create wealth for themselves.
Buyers can be put off by higher interest rates, but Seawright advocates for looking at the total monthly payment amount first. If that is a figure that a home buyer can manage, then the interest rate can be set to the side for the time being. “The refinance market never closes,” said Seawright. Homeowners can act now on a house that meets their needs for location, accommodation, and community and then reevaluate the interest rate at a later date when the market changes again. A higher interest rate should not, according to Kevin Seawright, come between a buyer and a home if the payments are manageable month to month. Once a home is owned, the buyer has equity in the property and can do more than just refinance if they need to down the line.
While Seawright preaches acting on the market in 2022, he does not expect people to pay beyond their means. It is important for buyers to understand the limits of their own finances and what value can be had for the money that is truly available at the time of purchase. Seawright encourages buyers to be honest with themselves about what they can afford in a monthly payment along with other expenses and in light of their actual take-home income: “What is affordable to you, what you will accept? Your first house may not be your dream house. Your first house is a goal for you to achieve wealth to move on.” The goal, instead, is to make an entrance into the housing market with a property that will suit a buyer’s needs and budget and allow for future growth.
With this mindset, home buyers of even the most emotional sort can start to look at their first home purchase as a business move, not just a personal one. “The biggest thing is will you have equity in that home and be able to move forward to your next opportunity,” said Seawright. And that’s a critical aspect since buying a home is “the biggest transaction you will ever make.”
Dream homes aside, Seawright’s firm remains active in the 2022 housing market, acquiring a number of properties in and around Baltimore City and revitalizing them for first-time home buyers. These endeavors include everything from single family homes to town homes, giving people the opportunity to escape the rental cycle while remaining in the communities that they have come to love. RPS focuses its renovations on aspects that will add value to the property while meeting the needs of a broad cross-section of people. When upgrading or evaluating a recently renovated property, Seawright reminds home buyers to look for the essential needs rather than the emotional desires. Functionality should almost always outweigh aesthetics when home shopping, said Seawright, with a focus on systems and aspects that will cost a lot if they have not already been addressed. This includes HVAC systems, roofing repairs or replacements, and appliance updates, which many builders will gloss over in their attempt to flip a house quickly and affordably.
When it comes to deciding how to act in the market, Seawright also urges home buyers to consider themselves as their own personal CEO. Managing your personal finances as you would run a business can give you a more objective view on what expenses should be allocated along the way. Just like CEOs in traditional businesses, home buyers also need to choose their advisors wisely. “Try to make sure that you have quality people around you when you’re making these decisions,” said Seawright. “But definitely make the decision yourself because, quite frankly, nobody else is going to pay for it for you.” This can include anyone from a trusted real estate agent to counseling classes offered by the Neighborhood Housing Services in Baltimore (https://www.nhsbaltimore.org/)or other municipalities.