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Why is it so difficult to buy a home in the US?

2021-07-13T16:41:09.624Z


As potential buyers increased, home prices rose in the pandemic. In addition, owners turned to rent


Buying a home in the US is a bidding competition 3:08

(CNN Business) -

Buying a home of her own became a priority for Kelly Robinson during the pandemic, as she began to feel cramped in her Indianapolis apartment.

“Having to stay home so long last fall made me decide it's time to buy a house,” she said.

Among the main amenities he was looking for were outdoor space and more privacy.

Record low interest rates further motivated her, and Robinson set her goal of buying during the spring when she expected more properties to be available.

It would also give you time to get your finances in order.

"But by the time I got pre-approved for credit and I started seriously looking at houses, the market went crazy," he said.

Robinson set a budget of $ 250,000.

But in his market - the suburb of Greenwood - homes began selling in a matter of days, with as many as 10 competing offers, and sometimes as much as $ 100,000 above the asking price.

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“'Crazy' for me is not doing an inspection because you want to be number one on the homeowner's list,” he said.

"That is a risk that I am not willing to take. And having to make an immediate decision the day you see the house? That is another thing that makes me really nervous."

That is why he decided to freeze the house search and continue renting.

Why are house prices going up?

3:37

"There are so many aggressive buyers out there and I'm not willing to compete with that," she said.

“I need to be happy today, but I also want to be happy a year from now.

If I overpay or don't do an inspection, that will create more problems down the road ”.

Faced with cash offers they can't match and fierce competition at every home they visit, many buyers are exiting the market and choosing to wait and reevaluate their options.

Buyers "burned out"

The housing market was on fire this spring, leaving many potential buyers "burned out."

Low-rate mortgages have been fueling demand, but there was also a record decline in the inventory of available properties.

That pushed home prices to a record high, with some homes attracting multiple cash offers, and others selling for $ 1,000,000 above the list price.

  • There is madness of the real estate market

But home sales have fallen for the fourth month in a row, partly because there aren't enough homes to buy, but also because competition and high prices are disincentives for those who can't compete, according to a recent report from the National Association of Agents. Real Estate (NAR).

"Clearly sales are down in part due to a decline in inventory, but affordability is pushing some buyers out of the market," said Lawrence Yun, chief economist at NAR.

"Home buyers qualify for a mortgage based on their income, but with prices rising 20% ​​or more, they are simply out of the market."

Prices rise and panic home purchases 1:16

The effect of high prices

Only 32% of consumers think it's a good time to buy a home, according to the June Fannie Mae Home Buying Sentiment Index. That's a record low. The main reason people were pessimistic about buying houses was the high prices. That sentiment was particularly strong among first-time tenants looking to buy, said Doug Duncan, vice president and chief economist at Fannie Mae.

"While all the surveyed segments have expressed greater negativity about home buying in recent months, tenants who say they plan to buy a home in the coming years have shown a greater decline in the desire to buy a home than homeowners, "he said." Affordability concerns may affect first-time homeowners more than other segments of consumers who are already homeowners. "

Still, even in the face of tough buying conditions, many prospective homeowners are still trying to buy now, Duncan said, especially with mortgage rates still relatively low and a down payment out of the box.

"I'm encouraging my buyers to stay on track," said Corey Burr, vice president of the international real estate agency TTR Sotheby's in Washington. "They need to have persistent confidence that their dream home will be available and they will be able to buy it.

Just because it's difficult doesn't mean it's impossible. "

Why are house prices going up?

3:37

Tour the wild market for rent

It is true, buying a house is not impossible.

Many people are doing it.

But more people have tried and still haven't been able to.

And there are limits to how much time and emotional energy they are willing to invest until they are kicked out of the market.

Steven and Laura Andranigian, first-time buyers, planned to move from their home near Monterey, California, to the Coachella Valley in Southern California, where they have family, and Laura got a job teaching at an elementary school.

Getting a home that costs less than $ 500,000 has them chasing properties as soon as they make the list.

Many times, houses are sold before they can even make an offer.

Twice they were laughed at for asking for time to do a pre-bid inspection.

They have lost five offers so far.

  • Inflation continues to rise in the US Here are the reasons

"They tell you, 'Here are ten things you need to do to buy a house,'" he said. "We did 20 of those things.

And it is still like we are not allowed to participate.

Because there are people with cash who also want to buy here and now ”.

They have been saving to buy a home for years and searching for months.

But now they realize that their purchase options are to get something that needs fixing in an area where they do not want to live, to wait for the construction of a new home and pay a premium amount for it, or to buy something above their budget.

"The only way to buy [a house that costs] more than US $ 500,000 is for my relatives to give me or lend me the difference," said Steve Andranigian. "But it seems excessive for people with good, stable jobs to get US $ 200,000 from it. family.

Even when you did everything right, do you still need more? "

The Andranigians decided to abandon the search for houses.

"We decided to rent for a while while we wait for the housing market to settle or resolve their situation," Steven said.

TikTok is useful for finding tenants 1:26

But getting a rental won't be easy either.

The most irritating turn of events, he said, would be having to rent a house that we previously made an offer on.

You've already seen some of the homes you bid on come back on the market as rental homes just before the deal closed.

Although a property like that would be the place they would love to live, it would be adding insult to injury to have to rent it after trying to buy it.

"Having to talk to the landlord, and hear that they were sitting on a lot of cash and wanted to put the house up for rent while we were just trying to buy our first home would be really difficult," he said.

"But finding out that the owner is a hedge fund and belongs to a faceless company? That would be worse. We don't want to rent the place. We want to buy."

Real-estate market

Source: cnnespanol

All news articles on 2021-07-13

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