The unusual events of the last twelve months have created at times an almost frenzied market in certain real estate markets. The combination of low inventory and high demand has heightened the sense of competition between would be buyers. Some homeowners are now regretting their own lack of due diligence when unforeseen but easily avoidable issues emerged.
The Wall Street Journal reports on the buyer’s remorse experienced by a section of homeowners who bought houses in the last 10 months. The cultural shift brought on by COVID-19, together with ultra-low interest rates and the rising Millennial generation, caused a huge spike in demand for housing, even while the number of homes on the market plummeted. This has driven up the median price of homes as well as sparking bidding wars, where one house will get a dozen offers within days of listing and often sell for much higher than the asking price.
This rush to buy caused some homeowners to close on homes prematurely before the competition did. People also wanted to escape crowded apartments and crowded cities due to concerns over the Coronavirus.
For instance, the Weiss family moved from Brooklyn to Northern California over the summer. After being outbid on one home and having to back out on a second, they paid around $100,000 above the $1.89 million asking price to secure the home. They did not realize at the time that the home’s wood siding was currently being filled with holes by the local acorn woodpeckers. After a number of attempts at deterring or removing the birds, the Weisses had to replace the siding entirely. The whole effort cost $150,000 on top of the cost of the home.
Some homebuyers have waived professional home inspections in their desire to secure a home before someone else beats them to it. According to HomeAdvisor, the average number of emergency home repairs triple in 2020 to 1.2 up from 0.4 in 2019.
Stella Guan, a graphic designer who moved from the Northeast to L.A., ended up paying $600,000 for a home after getting caught up in Los Angeles’ super hot real estate market. She had done an inspection on the home, which revealed the presence of both mold and asbestos. In the heat of the moment, she was okay with proceeding despite the warning signs, but soon came to regret it. She eventually sold the home after a few months, having sustained losses.
The homeowners highlighted in the report are mostly focused on the coasts in California and New York. These two states are some of the most expensive under normal circumstances, only compounding the factors driving the highly competitive national housing market.
The key takeaway is not to slack on doing your due diligence, especially with regards to getting a professional home inspection. When making as big a decision as purchasing a home, a little bit of prudence pays big dividends.