I spent 3 weeks talking to realtors across the country about how to navigate the chaotic real estate market. Here are my 4 biggest takeaways about homebuying.

Male realtor shows house for sale to young couple
Real estate sales have been booming during the pandemic as many Americans migrated out of big cities or upgraded to larger homes.

  • I spent weeks talking with realtors from across the country about the chaotic market.
  • They shared their best tips on what to know in advance and how to win a bidding war.
  • I found four major takeaways, including that buying too quickly could lead to regret.
  • See more stories on Insider’s business page.

Last year, during the initial weeks of the pandemic lockdowns, it was comforting to indulge in a fantasy: a home with extra space and maybe even it’s own backyard.

This life, which previously felt unavailable to many city-dwelling millennials like me, suddenly seemed within reach. The pandemic made working from anywhere the norm, not the exception. And those of us who were lucky to have kept our jobs during a period of economic uncertainty for many Americans were able to save money for maybe the first time in our adult lives, aided by stimulus checks and, frankly, nothing to spend money on.

All of a sudden, this fantasy seemed more like a possibility, and many millennials decided to take the leap. Combined with existing homeowners looking to upgrade or expand, or simply take advantage of low interest rates, the US real estate market has become a wild land-grab, with buyers hoping to snap up homes amid soaring prices.

Read more: Should I buy a home right now? Here are the 5 things you should know before diving into the bonkers housing market.

To learn more about the market – and perhaps, selfishly, to understand the situation in case I wanted to explore the process myself – I turned to eight realtors who work in markets across the country to answer questions like what prospective buyers should know going into the process, how to win a bidding war, and what other buyers are looking for in a home right now.

Here are my biggest takeaways after spending three weeks learning from realtors nationwide:

Try not to fall in love with every house you see.

Given the competitive state of the market, the homebuying process can take a toll, emotionally speaking.

Glen Clemmons, a broker and realtor for Costello Real Estate and Investments in North Carolina, said that in some situations, both he and his clients have ended up feeling “beat up.”

“I had one client who wrote 15 offers before they finally got one, and that’s exhausting,” he said.

Clemmons said his clients are going to multiple showings, putting in several offers, and generally being put through “the emotional roller coaster of, ‘Are we going to get this one?'”

“What I would say is, check your heart when you walk through a house,” he added. “[Going to a showing is] not a guarantee that you’re going to get it. Put your best foot forward, and be patient.”

Know that you can always fix ugly.

Mary Pope-Handy, an agent with Northern California firm Sereno and a blogger who writes about Silicon Valley real estate, told Insider that she sees lots of first-time homebuyers who keep getting boxed out of competitive bidding wars. While many of her clients are looking for a move-in ready home, that’s not always an option.

She advises those buyers to look for a house that’s been on the market for a while, because it’s less likely to be competitive. But that advice does come with a caveat: The kinds of homes that have been for sale for a month or more, especially given the current state of the market, usually have something wrong with them. It could be that it’s priced too high, or that it’s just plain ugly.

“You can fix ugly,” she said. “I would always go with the ugly house, with walls in the right places, in a good location, and then fix ugly over time.”

Don’t ignore the condo market.

For some buyers, condos aren’t as attractive of an option as a standalone house, especially during the pandemic, said Sean Waeiss, a broker and the owner of Wise Property Group in Austin.

Condos aren’t always what people envision as their first home since they’re grouped together and don’t always have their own outdoor space. From an investment standpoint, too, a condo probably isn’t going to gain value like a single-family home. “It’s the canary in the coal mine. With recessionary periods and that sort of thing, it’s the first to get hurt and it’s the last to recover,” he said.

But a condo could also be the perfect option for a younger homebuyer, especially one who keeps getting outbid on single-family homes, Waeiss said. Demand, at least in Austin, is significantly lower than supply, and condos are typically situated in urban centers where it’s possible to walk to shops, bars, restaurants, and even the office – a key amenity now that cities across the US are reopening.

“I think Americans, by nature, have short-term memories,” he said. “When the majority of the country is vaccinated and events are happening, concerts are happening on a regular basis, and restaurants are operating at full capacity … I think that there’s going to be this increased demand in these dense downtown condo areas.”

Don’t buy a home just to own ‘something.’

Nadine Pierre, a realtor with Allison James Estates & Homes in South Florida, said she’s putting listings on the market at 8 a.m., and by 5 p.m., she’ll already have 20 offers. In an effort to drum up inventory, she’s been sending out letters to the neighborhoods her clients are looking at in hopes of finding a “dormant seller.”

Clemmons said that some of his buyers have started putting offers in on “coming soon” listings, sight unseen.

But a recent survey from Bankrate found that 64% of millennial homeowners are experiencing regret after buying their current home, mostly due to unexpected costs. Most said that maintenance and other costs are too high, their home is in a bad location, or they bought a house that’s either too big or too small for them.

Scott Trench, the CEO of the real-estate-investing resource BiggerPockets, recently told Insider’s Taylor Borden that buyers should think twice about trying to purchase a house right now.

“Frantically trying to buy ‘something’ is a great way to make a bad purchase,” he said.

Read the original article on Business Insider

Millennials who snapped up homes in the hot real estate market reveal their biggest regrets, from unexpected costs to high mortgage payments

House for sale sold sign
  • A new Bankrate survey found that 64% of millennials regret buying their current home.
  • Their reasons range from unexpected maintenance costs to high mortgage payments.
  • The frenzied market has led many buyers to snap up homes, skipping inspections and due diligence.
  • See more stories on Insider’s business page.

Millennials who may have rushed to snap up homes during the pandemic are beginning to regret their purchases after discovering sky-high maintenance costs and a mortgage that’s too expensive.

According to a new survey from Bankrate, 64% of millennial homeowners are experiencing regret after buying their current home, mostly due to unexpected costs. Bankrate surveyed 1,425 homeowners between April 21 and April 23 and found that 41% of homeowners overall are feeling dissatisfied in at least one area.

Among homeowners between the ages of 25 and 40, their biggest regrets range from the size of the home to the location:

  • 21% of millennials said the maintenance and other costs are too high
  • 15% said their current home is in a bad location
  • 14% said they bought too big of a house
  • 14% said they bought too small of a house
  • 13% said their mortgage payment is too high each month
  • 13% said they overpaid or paid too much for their home
  • 12% said they didn’t get the best mortgage rate
  • 9% said they don’t think the home was a good investment
  • 5% said they had other reasons for regretting their purchase

Expenses like repairing a roof or fixing appliances or heating and cooling systems seem to be tripping up millennial homebuyers the most, Mark Hamrick, Bankrate.com’s senior economic analyst, said in a blog post.

“It isn’t a question whether such expenses arise, only when and how much they will cost,” he said.

Read more: Home prices are soaring across the US, but these 11 places are the wildest right now

The real estate boom in the US is being driven by a combination of factors – primarily, low interest rates and a pandemic-induced desire for more space and distance from crowded city centers. It’s led to a chaotic market where bidding wars are the norm, prices are soaring, and inventory has hit record lows.

Real estate agents recently told Insider that they saw the market begin to shift in the spring and summer of last year with no sign of it slowing down in 2022.

Glen Clemmons, a broker and realtor for Costello Real Estate and Investments in North Carolina, told Insider that some of his buyers have started putting offers in on “coming soon” listings, sight unseen; Nadine Pierre, a realtor with Allison James Estates & Homes in South Florida, said she’s putting listings on the market at 8 AM – by 5 PM, she’ll have 20 offers.

That frenzied market is leading hopeful buyers to skip steps they may have normally taken in order to nab a house. The Wall Street Journal’s Candace Taylor reported earlier this year that buyers had started skipping due diligence and waiving inspections, only to discover costly issues down the line like wasp infestations or destructive local woodpeckers.

Scott Trench, the CEO of the real-estate-investing resource BiggerPockets, recently told Insider that the current market should make buyers think twice about trying to purchase a house right now.

“Frantically trying to buy ‘something’ is a great way to make a bad purchase,” he said.

Read the original article on Business Insider

High-earning Americans drove 2020’s migration boom, and it shows how wealth is splitting the millennial generation

suburbs
High-earners were most likely to move and buy a house in 2020.

Americans stopped moving around the 1980s, but that changed last year with remote work.

A new Apartment List report that surveyed 5,000 Americans and analyzed US Census data has confirmed the migration narrative of 2020: Remote work ignited a residential migration rebound as the number of movers increased by 14% to 16% from 2019 to 2020 – it was the first US migration increase in over a decade.

This has big implications for millennial homebuying in particular and wealth inequality in general. The ApartmentList data shows the migrants were largely high-income, meaning that migration was K-shaped, just like the uneven economy born by the coronavirus pandemic. With migration has come a boom in homebuying, and millennials have taken the lead in homebuying, with high-net-worth millennials at the top of the K.

Although the study doesn’t break down generational data, millennials likely comprise many of the high-income households, defined as those earning over $150,000. A previous Apartment List report revealed that the millennial homeownership rate climbed to 47.9% from 40% just three years ago. Many of these millennial homebuyers were likely the same as the 16% of high-income workers that moved over the past year, a 39% jump from the Census Bureau’s estimate of American migrants in 2019.

This marks a sharp contrast from the past decade, in which lower-income workers led migration patterns. Low-income households moved during the migration boom as well, per the report, but the high-income group is more likely to work in flexible jobs. They’ve taken advantage of remote work to move across the country in search of more space and more affordable housing.

Apartment List also found that high-income workers were twice as likely to purchase a home as low-income workers, which dovetails with millennials reaching peak homebuying age during the pandemic and leading the housing recovery. Historically low interest rates made more types of homes viable for the generation, at least for those who had enough money saved to win out bidding wars in a cutthroat market.

Other millennials were priced out as housing prices reached record highs, while others still couldn’t even fathom becoming homeowners. Many moved back home with their parents during the pandemic, either temporarily or permanently. According to a Pew Research Center report, 52% of young adults lived with at least one of their parents as of July 2020, topping the last high of 48% many decades ago, in 1940.

The millennial wealth gap

This migration divide exemplifies the intragenerational millennial wealth gap, which has widened during the pandemic. Such millennial inequality dates back to the Great Recession, with wealthier millennials faring well while their low-earning peers are struggling.

The affordability crisis millennials were already facing prepandemic has left some with little wealth to fall back on as they experience unemployment and other hardships during the coronavirus recession, causing some to move back in with their parents. But a smaller, higher-earning group with stable income has been able to save, invest, and even buy homes with extra money they would otherwise spend in non-pandemic times.

Millennials are experiencing their own K-shaped recovery, uniquely compounded by two recessions. Generational researcher Jason Dorsey, the president of the Center for Generational Kinetics, previously told Insider this could lead to an unequal recovery between these two groups, with those those who lost a job recovering longer than those who began the pandemic with a better financial backstop.

This uneven rebound might have an effect on migration as well. As the report concludes, continuing migration patterns could further redistribute wealth away from the country’s biggest and priciest cities.

Read the original article on Business Insider