By KIMBERLEY HAAS
This Valentine’s Day, if your heart is broken because you keep falling in love with homes to lose them to other buyers, you are not alone.
Cindy Flynn, Director of Corporate Services at Comey & Shepherd in Cincinnati, Ohio, said buyers in her market are currently submitting an average of eight offers before landing a home.
Although buyers are getting a thicker skin, Flynn said, the process is still an emotional one. She suggests keeping an open mind, a positive attitude, and faith that this spring there will be more inventory available.
“I hold true to the idea that everything happens for a reason,” Flynn told The Mortgage Note in an interview. “There are other fish in the sea, there are other homes on the market.”
Cincinnati’s market is similar to others throughout the country, where there are currently more buyers than sellers. Appreciation for homes is rising 10% to 20% year-over-year due to the fact that buyers are still paying well over list price.
Flynn said buyers can help themselves by getting a realtor if they have not already. A realtor can help people decide whether or not they are bidding on a home they can afford, and work as an advocate for a buyer.
If you feel alone in the process even when equipped with all the information you need, that’s natural.
Real Estate Reporter and Editor Clare Trapasso wrote an article for Realtor.com which described her experiences as a first-time homebuyer. She and her partner started looking for a home during the COVID-19 pandemic.
“As first-time buyers, we knew that finding a home outside of New York City wouldn’t be easy. However, we were done with paying what seemed like a fortune in rent for a small apartment in a city that had been largely shuttered and that no longer felt safe. So like many other first-time buyers, we naively believed that as two professionals we would somehow survive the process largely unscathed,” Trapasso wrote.
“That optimism abruptly evaporated once we made our first offer on a house—and were promptly outbid by about $100,000,” she continued.
Trapasso shared eight surprising lessons she learned buying her first home, which included not settling on the first mortgage offered.
Despite an uptick in job numbers and an increase in personal incomes, there is still uncertainty about how the latest Labor Statistics Report will impact the housing market.
Elizabeth Rose is a Financial Planner and Lender with Mortgage 300 based in Dallas, Texas. She told The Mortgage Note the numbers show a lot of positive growth, but maybe not as much growth as may be needed right now to have a significant impact.
“I know it was a good number and that a lot of jobs were added,” Rose said. “But if you look at the details, you see that so many of these are in the leisure and hospitality areas. Which is, quite possibly the lower-paying jobs. Also, when I drive down the street, I see McDonald’s is hiring for $17 an hour and Starbucks is offering $22 an hour. It’s the last of people getting work. They can’t find people willing to work. I wonder how much of that is playing into that 5% pop.”
Rose said the most important factor in purchasing a home is how the figures look in a buyer’s personal portfolio. Now may or may not be the time to buy.
“We all have a personal economy,” Rose added. “We can be driven by the global economy or by the U.S. economy. But really and truly our decisions are made on our personal economy. While a lot of people look at buying a home as an investment, when you buy a home, you are buying a place to live and grow and have pride in.”
Rose said even in today’s environment buying a home is a great investment.
Low-income and minority buyers will continue to be crowded out of the housing market in 2022, according to the director of research at the AEI Housing Center.
The American Enterprise Institute is located in Washington, D.C., and during a recent webinar, Director of Research Tobias Peter said entry-level homebuyers are being replaced by borrowers with higher incomes in many markets.
“When we tally up the entry-level share of all home sales, we’re finding that the entry-level, as of December of 2021, accounted for 52.7%, which is, of course, much down from before the pandemic. In December of 2019, it was at 59.9%, and when we started tracking this back in 2012, it was at 71%,” Peter said.
Edward Pinto, Senior Fellow and Director of the AEI Housing Center, said first-time homebuyers should stay away from overbidding on homes and should never waive an inspection.
First-time buyers tend to have a lower credit score, a median of 720 versus 753 for repeat buyers.
Pinto has bought eight homes during his adulthood.
“My advice is as follows: Don’t get in over your head. If you can’t afford it, you can’t afford it,” Pinto told The Mortgage Note.
At the same time, Pinto said no matter what the market is, real estate always seems expensive. He recalled buying his home in Washington, D.C., 30 years ago.
“We called it our dream home because we spent more than we ever thought we were going to spend,” Pinto said.
AEI Housing Center has a market trends report, which provides current and historical market trends for specific addresses and may be helpful to those looking for a home, Pinto said.
Email story ideas to Editor Kimberley Haas: [email protected]