ALEX WEIG – AP Business Writer
LOS ANGELES (AP) – Shortly after moving to South Florida for a new job in the U.S. military, Shannon Kaufman and his wife Wendy signed on to a completely different mission: buying a home.
For months, they browsed the lists, working out a strategy late into the night on which homes to target, and figuring out how much they could afford, even if it meant using a portion of their retirement savings.
After visiting 200 facilities and making suggestions for 15 homes that ultimately failed, the Kaufmans finally found a home that meets at least some of their needs. However, they will rent it.
“We found a place smaller than we wanted, but it will work until we build something or the market cools down,” said Shannon Kaufman, 47.
The housing market in America is becoming increasingly frantic, and prices are unaffordable for many buyers, especially for newcomers. This spring, traditionally the busiest season for home sales, is more likely to bring frustration and frustration for novice home buyers than home ownership.
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The number of homes for sale nationwide remains almost record low, causing fierce competition among buyers vying for fewer homes. From Los Angeles to Raleigh, North Carolina, when a home hits the market, it usually sells out in a matter of days.
Bidding wars are common, often raising the sale price much higher than requested by the owner. And potential buyers who plan to finance their purchase with a home loan often lose out to investors and others who can buy a home for cash. According to the National Association of Realtors, a quarter of all homes sold in February were purchased for cash, up from 22% a year ago. In February, real estate investors accounted for 19% of transactions against 17% a year ago.
Nicole Hahn, project manager, and her husband Ed moved to Mesa, Arizona, from Phoenix two years ago to cut the road to work. Housing prices in the Phoenix area jumped 20% year-over-year to $ 500,000. Realtor.com.
“Prices are just rising and rising,” Khan said.
The couple lost more than a dozen homes they were bidding on. Some of the homes ended up being sold for less cash than the couple offered.
“We don’t have $ 500,000 in cash,” said Khan, 42. “We just can’t compete with that.”
Fewer homes in the market and higher prices have been a hallmark of the housing market for the past 10 years or so. Now the rise in mortgage rates further complicates the equation of buying a home. Higher rates may limit the pool of buyers and cool the growth rate of house prices – good news for buyers. But higher rates also weaken their purchasing power.
The average rate on a 30-year home loan rose to about 4.7%. A year ago, average rates fluctuated just above 3%, according to mortgage buyer Freddie Mac. The increase came after a sharp rise in 10-year Treasury bond yields, reflecting expectations of higher interest rates overall as the Federal Reserve moves toward raising short-term rates to fight inflation.
According to the Mortgage Bankers Association, potential 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 ago.
“It’s hard to believe, but I think this year will be harder in some ways than in previous years,” said Daniel Hale. Realtor.comchief economist. “At least so far we have seen the number of homes for sale continue to decline and prices continue to rise. These two factors together indicate that a competitive market will keep buyers on their feet. ”
Experts say buyers should pay attention to homes that are on the list within what they can afford.
“You have to look 15% -20% below their limit; it gives them opportunities for assessment gaps, it gives them opportunities to negotiate, ”said Tracy Hatton, a Century 21 broker in Indianapolis.
Being well-prepared is sometimes not enough if the homeowner prefers to accept an offer for cash rather than sell to a buyer with financing.
Wendy Kaufman in South Florida could not even get to the open house for real estate in the market after she discovered that the couple has a mortgage backed by the Veterans Administration.
“When they saw that I had a previous VA approval, they said,‘ Sorry, we don’t want to work with you, ’” she said.
Sometimes buyers do not have the opportunity to make an offer before the house is sold out, unnoticed.
In the Miami area, so-called “blind offers” have become a common way to bypass other buyers, said Rafael Corrales, a Redfin agent.
One reason is the ultra-low level of homes for sale, which for the larger Miami metropolitan area fell 55% in February from a year ago. Realtor.com.
Although each market is unique, there is one common hurdle in the US: affordability. According to the National Association of Realtors, the average cost of housing in the US jumped 15% compared to a year earlier and amounted to 357,300 dollars.
In February, in the San Jose, California subway area, there were 40% fewer homes for sale than a year ago. Realtor.com. Buyers there should be guided by some of the most expensive housing prices in the country. The average house price in February rose 13.3% to about $ 1.36 million from a year earlier.
Market trends are slightly friendlier to buyers in the Midwest, including the Indianapolis metropolitan area, where the number of homes for sale has fallen by about 23% from last year. The average house price there was $ 287,000 in February, up 8.5% from a year earlier.
In Raleigh, house volumes fell a whopping 55% in February from a year earlier. Competition for fewer homes has helped raise the average cost of a home to $ 430,000, up 9% from February 2021.
These trends have contributed to more market competitiveness for buyers such as Lisa Pierce and her husband Alex Berard. Buyers for the first time accounted for 29% of all homes sold in the country last month. Over the past 10 years, this share has averaged 31% annually.
In December, the couple began looking for homes for $ 350,000 and below. They offered $ 5,000 in excess of the asking price for the two properties, but lost to competitors.
“That was all we could afford,” said Lisa Pierce, the 32-year-old project manager. “It’s really a defeat, a very disappointment.”
Eventually, the couple bought a townhouse in a new building complex, although they see it as a step towards a more spacious house with a large yard.
“Its big enough that we can still start a family and then move on when I hope the market dies down in a couple of years,” she said.
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