House hunters: A high-stakes game of musical chairs
“House hunting in 2021 is not for the fainthearted,” said Olivia Christensen in Insider.com. My husband and I agreed to “get serious about finding a new home” this spring. But soon after we started searching, “it began to feel like every day came with a new warning” about the craziness of the real estate market. Our own house—bought for $113,000 in 2014—sold for $220,000 in two days. But that left us with “an actual move-out date” and no home to move into. We liked one house but lost to “a cash offer of $30,000 over asking.” Our parents and friends encouraged us to “wait it out” and rent, but finally we got an offer accepted. It was “$10,000 over asking with escalators”—a promise to match higher offers—“up to $30,000,” and we waived inspections and appraisals. We’re thrilled, but this market has “obliterated my impulse for excitement.” It’s truly “the Wild West out there.”
Adding to the torrid market are housing “wholesalers,” said Michael Sasso in Bloomberg.com. “Unlike fix-and-flip investors, who take title to homes, renovate them, and put them back on the market, wholesalers typically negotiate with homeowners just to put homes under contract and sell those contracts to flippers.” Motivated by record-low interest rates and the tight housing supply, they have flooded the market, and some employ tactics to “dupe sellers with lowball offers.” The city of Philadelphia recently passed regulations “after neighborhoods were overrun with ‘We Buy Houses’ signs.” Realtors are also selling more “whisper listings,” said Nicole Friedman in The Wall Street Journal. These are unlisted properties shown exclusively to “a small circle of buyers.” The National Association of Realtors “discourages the practice” and requires that listings be added to their local database if they are publicly advertised. But listings can still be hidden “if they are only shared within one brokerage, called an ‘office exclusive.’”
“Can a boom like this last?” asked Bonnie Kristian in TheWeek .com. We’re selling, and our real estate agent “says our house will likely be listed on a Wednesday, host dozens if not hundreds of potential buyers in a two-day open house on Friday and Saturday, and go under contract by Monday.” That doesn’t feel sustainable. But unlike in 2008, there aren’t tales of “tiny down payments and subprime loans,” so there seems less chance of an overnight collapse. That doesn’t mean bad decisions aren’t being made, said Aly Yale in Money.com, and some pandemic-market buyers are already having regrets. Sabrina Beaumont admits “feeling stupid” about settling for a “house that was smaller and more expensive” than ones she was considering before the pandemic. FOMO—or fear of missing out—“took over,” she said. In this feverish market, that feeling is increasingly common.