With double-digit annual gains fueling homeowner wealth, owners have gotten richer, and they’re starting to take advantage of that added equity.

Cash-out refinancing, which allows owners to take out a lump sum from their equity through loans, increased by 33% in October compared to a year prior, according to Black Knight Inc.

The amount of U.S. tappable home equity reached a record high in October of $9.1 trillion, according to Black Knight.

“We have record home equity thanks to record home prices,” Dan Roccato, a financial analyst with Credible, told Forbes.com. “We’ve had this incredible run-up in home prices over the last 18 months.”

Homeowners must meet certain credit standards to be able to tap into their home’s equity through cash-out refinancing. Lenders usually cap mortgages at 80% of a home’s value.

The median existing-home price for all housing types nationwide in September was up 13.3%, according to the National Association of REALTORS®. NAR predicts that prices slow in the new year, mostly due to rising mortgage rates that will likely lead to fewer home sales. Home prices are predicted to moderate at a 2.8% growth in 2022, according to NAR.

A first-time home buyer may need to be educated about the realities of the housing market before they fall in love with a home and then quickly lose out to another bid. To prevent heartache, real estate professionals can have frank conversations with their buyers about the realities of the competition and the amount of money it takes to become a home buyer in today’s heated market.

No home will be perfect.

Housing inventories are ultra-low. Any home viewed as “perfect” will have many buyers lined up, thus likely instigating a bidding war. Buyers may need to be willing to accept some cosmetic changes or a home farther from their preferred destination, realtor.com® says.

Buyers also can’t expect sellers to fix everything after a home inspection. In a seller’s market, many sellers have backup offers, including those buyers who may be willing to waive a home inspection. “Expecting a seller in a competitive market to address every line item [from an inspection report] is a delusion that could cost you the house,” realtor.com® says.

You can set up a mortgage after you find a home.

Successful house hunting today is done at a quick pace. That means lining up everything for financing before you even look. A mortgage preapproval is critical, agents say.

“Your first call when even thinking about maybe purchasing should be your bank,” Haden Riggs, a team leader with Keller Williams in Tyler, Texas, told realtor.com®. “They will line everything out and put you in the best position to purchase.” Buyers will be unable to submit a competitive offer without proof of funds.

You’ll likely pay more than the asking price.

Bidding wars have been driving up prices. Even as some signs of cooling appear in the market, buyers in today’s market are less likely to pay less than the asking price, and often they’re still paying more. Read more: Where Homes Are Selling for $100K Over Asking

If the price of a home looks too good to be true, it probably is. Some seller’s agents are using a bargain basement starting price in the hopes of a bidding war that drives up the price. Buyers will need to be ready with a competitive offer to triumph in buying a home in the current market.

A majority of house hunters say it’s not prices that are keeping them out of the housing market—it’s other buyers. Forty-five percent of prospective buyers recently surveyed say they keep getting outbid by other offers, according to a new survey from the National Association of Home Builders. The NAHB says this is only the third time in the survey’s history that the top reason prospective buyers have been unsuccessful has not been due to finding a home at an affordable price.

In the third quarter, 66% of active home buyers say they’ve spent three months or more searching for a home without success.

But even as competition remains fierce, prospective buyers are not giving up. Nearly half of active buyers who have been searching for three months or more say they will continue to look for the “right” home in the same location.

Twenty-nine percent of house hunters say they will accept a smaller or older home so they can expand their home search.

Twenty-two percent of buyers say they will give up on their home search until next year or later. That is down slightly from the second quarter, when 20% said they’d give up, and significantly lower than a record high of 28% reached in the final quarter of 2020, the NAHB survey shows.

The U.S. House of Representatives passed the bipartisan Infrastructure Investment and Jobs Act Friday, sending it to President Joe Biden for his signature.

The $1.2 trillion bill is the most significant investment in infrastructure in decades. It includes new money for the power grid, managing climate risks, and repairing and replacing aging roads, bridges, ports, airports, and railways.

It also contains a historic $65 billion investment in broadband, a key priority of the National Association of REALTORS®.

“NAR supported many elements of this legislation that will make communities more resilient and sustainable,” said NAR President Charlie Oppler.  “Our country has a dire need for broadband expansion, and this new funding will ensure all communities have affordable access to a world-class communications infrastructure and provide opportunities to rural, underserved, and low-income areas.”

NAR expressed concern over one element of the bill that uses guarantee fees charged by government-sponsored enterprises like Fannie Mae and Freddie Mac as a funding source.

“The nation faces critical challenges as Americans struggle to meet their mortgage obligations, find affordable housing amidst a supply shortage, and confront a widening homeownership gap among racial groups,” Oppler continued. “We are committed to working with Congress and the administration to ensure this redirected money does not diminish the vital GSE mission to provide affordable housing and equal access to credit in America.”

The measure passed the Senate in August by a vote of 69-30.

Offering slight relief to home buyers this week, the 30-year fixed-rate mortgage fell to a 3.09% average. But rates may rise again soon.

Housing analysts largely expect mortgage rates to increase in the following months due to the Federal Reserve’s announcement this week that it will slowly reduce its monthly bond purchases.

“While mortgage rates fell after several weeks on the rise, we expect future upticks due to strong economic data and as the Federal Reserve pulls back on its stimulus,” says Sam Khater, Freddie Mac’s chief economist. “That said, the housing market remains favorable for consumers, as rates remain below pre-pandemic levels and continue to support sustainable purchase and refinance opportunities.”

The National Association of REALTORS® forecasts the 30-year fixed-rate mortgage to average 3.5% by the second quarter of 2022.

How Will Higher Mortgage Rates Impact Home Buying?

Freddie Initiative Adds Rent Payments to Credit Reports

Freddie Mac reports the following national averages with mortgage rates for the week ending Nov. 4:

• 30-year fixed-rate mortgages: averaged 3.09%, with an average 0.7 points, falling from last week’s 3.14% average. Last year at this time, 30-year rates averaged 2.78%.
• 15-year fixed-rate mortgages: averaged 2.35%, with an average 0.6 points, decreasing from last week’s 2.37% average. A year ago, 15-year rates averaged 2.32%.
• 5-year Treasury-indexed hybrid adjustable-rate mortgages: averaged 2.54%, with an average 0.3 points, dropping from last week’s 2.56% average. A year ago, 5-year ARMs averaged 2.89%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.

More homeowners have become pet owners since the pandemic, and homeowners are showing a willingness to move for their pet. In fact, 43% of pet owners say they’d be willing to move to accommodate their pet, according to the National Association of REALTORS®. What’s more, 68% of pet owners surveyed by realtor.com® say they would pass on the perfect home if it didn’t meet their pet’s needs.

“Often rentals have high pet fees, or may restrict the number of pets allowed in a unit,” Jessica Lautz, vice president of demographics and behavioral insights at NAR, writes on the association’s blog. “Purchasing becomes a choice for some buyers that may be driven with their pet in mind.”

Unmarried couples, single women, and millennials have shown the most willingness to move for their pets, according to NAR’s data.

Some home buyers are even shopping for homes with their pets in tow. They are seeking their pets’ feedback as they tour homes for sale. Twenty percent of 1,000 U.S. adults surveyed by Ally Home in April said they bring their pets to look at homes. Women were more likely to bring their pets with them on a house hunt than men.

In a separate survey this year conducted by Homes.com, one in five of about 1,600 homeowners surveyed say they have rejected a home for pet-related reasons.

Many buyers with pets say they’re looking for more space. They desire a secure fence, hardwood floors, plenty of yard space, a mudroom, and proximity to parks and play areas, the Homes.com survey found.

Home sellers continue to get richer as prices rise. Profit margins on median-priced single-family home and condo sales climbed to 47.6%, which marks the highest level in a decade.

The typical home sale nationwide during the third quarter generated a record-high profit of $100,178 as national median home prices continued to rise, ATTOM Data Solutions, a real estate data firm, reports. That is up from $88,800 in the second quarter of this year. Profit margins reflect the change between the median purchase and resale price.

The largest annual increases in profit margins in the third quarter occurred in:

• Boise City, Idaho: margin up from 61.4% in the third quarter of 2020 to 130.3% in the third quarter of 2021
• Claremont-Lebanon, N.H.: up from 41.1% to 93.8%
• Augusta, Ga.: up from 19.6% to 56.6%
• Raleigh, N.C.: up from 30.4% to 67%
• Bellingham, Wash.: up from 69.5% to 105.6%

“The third quarter of this year marked another period in a banner year for a housing market boom that’s steaming ahead through its 10th year,” says Todd Teta, chief product officer at ATTOM Data Solutions. “Prices and seller profits again hit new highs since the market started coming back from the Great Recession in 2012.”

Still, Teta says there have been hints of a slowdown in recent weeks heading into what typically is a quieter fall and winter season. “The pandemic also remains a constant presence that could tamp things down,” he adds. “But, for now, the market engine seems to have nothing but high-octane gas in the tank.”

Expanding wealth and growing families are prompting more millennials to become homeowners. Ultra-low mortgage rates are continuing to attract them as well.

Young adults ranging from 26 to 41 years old comprise about 22% of the U.S. population. It’s why the housing market has been watching this age segment so closely for so long.

More millennials have become homeowners since the pandemic. Millennials have accounted for the largest share of home buyers over the past year—37%, reports Barron’s.

The pandemic is motivating purchases. The number of households headed by adults aged 30 to 44 years old jumped by 1.3 million during the pandemic.

Married couples ages 31 to 40 were more likely than any other age group to purchase homes, according to the National Association of REALTORS®. Also, the largest group of unmarried couples who purchased homes were adults between the ages of 22 to 30.

Millennials are approaching their peak earning years. “Over the next couple of decades, a quarter of the U.S. population is going to reach peak earning years, fueling continued housing demand—especially for inexpensive starter homes, which nationally had a beginning price of $304,200 in the second quarter of 2021,” Barron’s reports.

Remote work will only further housing demand, reports suggest. Millennials were the most likely generation to say that the reason for owning a home was to have a space of their own for a larger home, according to NAR’s data.

Student loan debt continues to hit this generation hard, however. That has made it more difficult to save enough to afford higher home prices. Read more: Student Debt Sidelines Half of Would-Be Buyers and Loosening the Yoke of Student Loan Debt

But housing analysts continue to remain bullish about the millennial generation’s impact on housing. Low interest rates, strong employment, and the growing perceptions over the importance of a home will likely continue to fuel a millennial housing boom, writes Dana Peterson for Barron’s.