LOS ANGELES (AP) – Shortly after moving to South Florida for a new job in the U.S. Army, Shannon Kaufman and his wife Wendy signed on for a full-time job: buying a home.
For months, they searched the list, devising strategies for what night to target homes, and deciding how much they could afford, even if they used some of their leisure savings.
After visiting the 200 list and offering offers in 15 homes, it eventually did not go away and the Kaufmans finally found a home that would fit some of their needs. Will rent though.
“We found a smaller space than we wanted, but it would work until we built something or the market cooled down,” said 47-year-old Shannon Kaufman.
The U.S. housing market has grown increasingly frantic, and prices have not reached many buyers, especially first-time buyers. This spring, the traditionally busiest season in home sales, will bring disappointment and frustration to home buyers who aspire to own a home.
The number of homes for sale nationally remains low, sparking fierce competition among buyers competing for lower homes. From Los Angeles to Raleigh, North Carolina, when a home comes on the market, it usually sells out in a few days.
Auction battles are common, often with the sale price being higher than the owner asks. Also, buyers who plan to finance their purchase with a home loan often miss out on the opportunity to buy a home with cash for investors and others. According to the National Real Estate Association, a quarter of all homes sold in February were purchased with cash, up 22% from a year ago. Real estate investors made 19% of their transactions in February, up from 17% a year earlier.
Project manager Nicole Con and her husband Ed moved from Phoenix to Mesa, Arizona two years ago to cut back on work. According to Realtor.com, house prices in the Phoenix area are up 20% from $ 500,000 a year earlier.
“Prices continue to rise,” Khan said.
The couple lost more than a dozen homes they had auctioned off. Some homes were sold for less than the couple had offered.
“We don’t have $ 500,000 in cash,” said Khan, 42. “We can’t compete with that.”
Low housing and high prices in the market have been a hallmark of the housing market for the past 10 years. Now, rising mortgage rates are further complicating the home-buying equation. Higher prices can control the number of buyers and slow down the growth rate of home prices – good news for buyers. But higher prices also weaken their purchasing power.
The average rate for a 30-year home loan has risen to about 4.7%. A year ago, the average rates were above 3%, according to mortgage buyer Freddie Mac. This increase, following a sharp move in 10-year Treasury yields, reflects expectations of higher interest rates overall as the Federal Reserve moves to raise short-term rates to combat rising inflation.
Buyers who applied for a home loan in February faced an average monthly mortgage payment of $ 1,653, including principal and interest, up 8.3% from a year earlier, according to the Mortgage Bankers Association.
“It’s hard to believe, but I think this year will be harder in some respects than it was in previous years,” said Daniel Hale, chief economist at Realtor.com. “So far, at least, we ‘ve seen the number of homes for sale continue to decline and prices continue to rise.
Experts say buyers should set their sights on listed homes as much as they can.
“You have to look 15% -20% below their limit; this allows them to have rating gaps, which allows them to negotiate,” said Tracy Hutton, a broker for Century 21 in Indianapolis.
If a homeowner wants to accept all cash offers instead of selling to a financially supported buyer, sometimes being well-prepared is not enough.
Wendy Kaufman, in South Florida, could not even move into an open house for a property in the market after revealing that the couple had a mortgage with the support of the veteran administration.
“When they saw that I had permission from the VA, they said, ‘Sorry, we do not want to work with you.’
Sometimes, buyers may not be able to find a home and offer a chance before it is found.
In the Miami area, so-called “blind offers” have become commonplace as a way to get around other buyers, said Redfin agent Rafael Corrales.
According to Realtor.com, one of the reasons for the very low number of homes for sale is the 55% drop in February in the Miami metropolitan area.
Although each market is unique, there is one common barrier across the United States: affordability. According to the National Association of Realtors, the average U.S. home price rose 15% in February.
According to Realtor.com, homes in the San Jose, California metro area saw 40% fewer home sales in February than there were a year ago. Buyers are likely to call everyone who looks appropriate, if there are only a few. The average home inventory price rose 13.3% to $ 1.36 million in February.
Market trends are a bit more welcoming to buyers in the Midwest, including the metropolitan area of Indianapolis, where the number of homes for sale is 23% lower than it was a year ago. The average home price in February was $ 287,000, 8.5% higher than the previous year.
In Raleigh, home listings were down 55% in February from a year earlier. Competition for lower homes helped raise the average home price to $ 430,000, an increase of 9% from February 2021.
Those trends have created a very competitive market for first-time buyers like Lisa Pierce and her husband Alex Ferrado. 29% of homes sold nationally last month were first-time buyers. That share has averaged 31% per year over the past 10 years.
The couple began looking for homes in December for $ 350,000 or less. They offered $ 5,000 more than the asking price on the two properties but lost to competing bidders.
Lisa Pierce, a 32-year-old project manager, said: “That’s all we could buy. It’s really defeated, really disappointing.”
Eventually, the couple bought a townhouse in a new construction community, yet they see it as a staircase to a spacious home with a large courtyard.
“It’s even bigger, we can still start our family, and then the market can move when it dies in a year or two,” he said.