Ron and Kathy Kern started looking seriously for their forever home last spring when their youngest child graduated. The couple hoped to swap their two-story, four-bedroom home in suburban Indianapolis for a smaller one-story ranch where they could age more comfortably in place.
Unfortunately, it didn’t work out as they had hoped.
The Kerns made four offers, withdrawing the last one and losing their escrow in the process when they learned how much needed home renovations would cost. After the demoralizing experience, they decided to put their research on hold until Ron, 61, retired from his job at an engineering company at some point.
âWe’ve never experienced a market like this before. â¦ It’s a roller coaster that we are ready to descend for a while. This latest offer just got us in, âsays Kathy, 58, an ATM specialist who recently retired from a credit union. Empty Nesters, who live in Fishers, IN, have trouble sleeping and losing weight due to stress. âWhen you find that house where you don’t have anything to renovate, it’s the house everyone is looking for. “
After facing over a year of record and rapidly rising house prices, ruthless bidding wars, all-cash offers 10-20% above asking price, and a historic shortage of properties for sale, many buyers in today’s pandemic-fueled housing market is suffering from buyer fatigue.
Some are exhausted and take a break, or quit the market altogether. Others fear that another real estate bubble is on the horizon (even if real estate experts think it is not likely), so put this one aside. And there are those whose prices were exceeded because house prices rose above their budget.
âThe Ultimate Sign of Buyer Fatigue is to Pause Research,â Says Realtor.comÂ® Chief Economist Danielle Hale. âI can understand how, in today’s tough market, some buyers may not want to keep looking.
âThere’s a real heartache that happens if you bid for a house and don’t get it. Mentally, a part of you was already attached to the house, âshe said.
Only about a third of recent homebuyers have seen their first offer on a property accepted, according to a January Realtor.com survey of recent and potential first-time buyers.
The situation was gloomier for first-time buyers, many of whom are struggling to pay the deposit. According to the survey, around 68% of first-time buyers fell in love with a home, but ultimately could not buy it, due to overbidding or lack of financing, or the home inspection failed, survey found.
The COVID-19 pandemic and all the safety issues that accompany it have made the situation worse. Some potential sellers have become more hesitant to list their properties, exacerbating the housing shortage. Meanwhile, desperate shoppers who can work remotely for part or even the whole week are moving further out of big cities and into smaller urban areas, raising prices and competition across the country.
âIt’s likely that it will continue to be competitive for the foreseeable future, unless something drastically changes and we see a lot more homes for sale,â Hale said. But “even though some buyers are pulling out, there are still a lot of buyers in the market.”
Many local buyers and first-time buyers are overpriced
Homework (aka all over) has pushed prices to all-time highs in many parts of the country where they were previously more reasonable. But many white-collar workers who no longer need to go to an office in the big, expensive coastal towns have been able to sell their expensive homes and use that money to buy homes in vacation areas as well as in more suburban areas. distant. and smaller towns. This made competition more difficult for the locals.
“It’s bad enough in our market for first-time buyers”, says Barbara jordan, real estate agent at Coldwell Banker Realty in Tampa, Florida. Many buyers who win the auction wars come from the Northeast, Chicago and California and sell their homes and move to Florida. âWhat we’re seeing is up to 20, 30 offers on a house. The ones who win are the cash buyers or have money they can throw over it. “
First-time buyers, most of whom have university education, have good jobs and often 20% down payments, sometimes just can’t compete, she says. This is because it is more difficult to get offers accepted with a mortgage loan. Sellers want to know that they will get the prices they are offered even if their property is not appraised.
âIt’s so sad, these are good people who did it all right,â Jordan says of these buyers. “But a lot of them are pulling out of the market.”
Across the Country, Los Angeles Area Realtor Scott Pinkerton says its clients who can afford to stay put are doing just that.
âMany were frustrated with losing to cash offers, investors and outbidding,â said Pinkerton of Century 21 Peak. Some who could have afforded a single family home find that they can only afford a condo now or that they may have to move to a cheaper location if they want to buy. “What they want is no longer available in their price range.”
But others are just waiting for the right opportunity.
âI have clients sitting on the fence contacting me every now and then, checking out what the market is and what they can get for their money,â he says. âSome people are waiting for a change in the market. “
Not everyone can wait for the market to cool further and more homes to go online. Many Dallas-based Associate Brokers Debbie murrayClients of are outsiders who have found employment in the area and need a place to live (whether they come to the office one or five days a week). The Dallas area, in particular, has become a hot spot for large companies (such as Toyota) moving their headquarters or expanding their operations in the area.
A Chicago couple Murray worked with made 11 offers before one was ultimately accepted. They recently closed a $ 1.1 million house they bought on sight for about $ 100,000 more than list price, with no surprises.
âIf you are moving here from out of state, you have no choice,â says Murray, who works at Allie Beth Allman & Associates.
Taking a break can be expensive for some buyers
Taking a break from the emotional health of an active home search can be a financial risk. While the bidding wars may ease a bit, potentially saving buyers a lot of money, mortgage prices and rates continue to rise.
âUnfortunately, in our market, prices keep going up and in some cases, for a buyer who waits too long, they can move out of the neighborhood they want the most,â he explains. Brad Pauly, a real estate broker with Pauly Presley Realty in Austin, TX. “I tell them I understand what they are going through, but to try to go ahead and wait until next week for properties to hit the market.”
During the COVID-19 pandemic, Austin became one of the hottest markets in the country. Median listing prices have jumped more than 46% in the metropolitan area from March 2020, when the pandemic changed lives in the United States, until August 2021, according to the most recent data from Realtor.com. (Subways include the main city and surrounding suburbs, towns and small towns.)
He sees houses selling for 40% above the list price as residents from off the coast have moved in and are pushing the prices up.
âYou have to be the crazy buyer to win. You have to be the one who is willing to pay well above market value to buy the home you really want, âsays Pauly.
Even those who can afford the higher prices cannot find the home they want with so few properties for sale.
âIt’s like the whole world is against them. They raise their hands. They are defeated, âsays real estate agent Greg Nino, from Re / Max Compass in Houston.
The Kerns, who were trying to find a permanent home in the suburbs of Indianapolis, certainly had had enough, at least for now.
âWe’re going to stop looking for a while,â says Ron Kern. âRight now the whole market is so out of whack. â¦ You don’t have time to think about all the things that need to be thought through.
âWe are really lucky that we don’t have to move. We have a beautiful house. We can stay here for a while, âhe said. “But at some point it would be nice to move on to something that works better for people our age.”