Homebuyers, panicked by rising rates and prices, make critical mistakes when buying a home

By Quentin Fottrell

First-time buyers and repeat buyers faced similar challenges finding a home that suited their needs, according to a new report

Americans desperate to buy a home or trade in their current home waived some of their most desirable requirements, with nearly a quarter of homebuyers saying they were unhappy with their final decision.

That’s according to a survey of more than 1,000 homebuyers by Clever Real Estate, a platform that matches buyers with agents. Homebuyers bought homes with less square footage (38%), expanded their search location (36%).

Some 88% of respondents said competition in the housing market had affected their buying decisions, with 36% of respondents saying they had accelerated their plans to buy a home, due to fears that prices and interest rates rise even further.

“After buying before under ‘normal’ market conditions, repeat buyers were 75% more likely than new buyers to be dissatisfied, but the market left a lot to be desired among newcomers who were struggling to find homes affordable,” the report said.

Additionally, respondents said they paid a median of $495,000 for their home, about 15% more than the national median price of $428,700. Nearly a third of repeat buyers and first-time buyers paid more than the asking price.

“Paying above asking price is 11% more common among first-time buyers, who are also more likely than repeat buyers to bid more,” he added. “Beginners paid a median of $77,500 above the listing price, while regular buyers offered $60,000.”

There may be no immediate respite or sidelined buyers. “We are seeing a real estate recession in terms of declining home sales and construction,” said Lawrence Yun, chief economist at the National Association of Realtors.

Sales of new homes fell 12.6% to a seasonally adjusted rate of 511,000 in July, from a revised 585,000 the previous month and down 26.9% on the year, the Commerce Department said Tuesday. Sales peaked at 1.04 million in August 2020.

Yun said this “recession” bears little resemblance to the subprime mortgage crash of 2008. “This is not a house price recession. Inventories remain tight and prices continue to rise nationwide, nearly 40% of homes still showing the full list price.”

Properties remained on the market for 14 days in July, the lowest number of days since the National Association of Realtors began tracking this in May 2011. That was unchanged from June, and down from 17 days compared to the same period a year ago.

The Clever Real Estate survey suggested it is still a seller’s market. A third of buyers have been looking for a home for three months or more, 80% of buyers have made more than one offer and 1 in 3 have actually submitted an offer without seeing it.

Making a demand bid is quick, but not without risk, he added. “Buyers are forgoing the ability to see the actual condition of the home and instead rely on second-hand information, such as online photos or a real estate agent’s opinion.”

Read more:

Americans say they are financially unprepared for a recession, so they are cutting back on discretionary buying ‘making a contraction more likely’

Mortgage application volume continues to decline as U.S. homebuyers pull back

US home values ​​fell for the first time since 2012, Zillow says. Sellers and buyers face a very different 2020 housing market

-Quentin Fottrell

 

(END) Dow Jones Newswire

08-25-22 0704ET

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