It's Harder Than Ever To Buy A House, And Bidding Wars Keep Breaking Out
Rebecca Ametrano and Dan Johnson are newlyweds thinking about having kids. So they wanted to buy their own house or a condo. But since January they've been getting outbid by other buyers.
"You imagine your life in this house, you put in an offer and then two days later it doesn't get accepted," Ametrano says. "For me, it's like very emotionally crushing."
Trying to buy a house right now is in some ways harder than it's ever been. There's a record shortage of homes for sale; many people are eager to buy. Bidding wars are breaking out, sending prices to record highs, and making it feel impossible for many people to buy a home.
"So I meditate a lot, practicing non-attachment," Johnson says. Actually the couple know quite a bit about attachment and emotions because they're both psychologists. They met during their training. But even with their psychology skills, they've been feeling frustrated.
"We just chose the worst, worst possible time in our lives in terms of the market," Johnson says.
They've looked at 40 homes. And they say it seems like every one is getting 10 or 15 offers and getting sold for way over the asking price. And selling in just a matter of days.
"You show up at an open house, and they're like, we already have an offer. You've got to beat it basically," Johnson says.
At a recent open house, the real estate agent told them the house was already sold and under agreement, but the sellers opened it for viewing "just in case."
"We left the house and the agent selling it was like, so what do you think?" Ametrano recalls. She was incredulous. "I was like, it was great! And it's sold!"
Even with the meditating, Johnson is not floating above the fray.
"You're at open houses and someone rolls up in like a 2020 Land Rover, you know, that's all decked out," he says. "You just want to be like come on! You know, it definitely sucks to lose."
The couple say it seems like some of the winners are reckless. Their real estate agent told them that some winning bidders not only offer significantly more than the asking price, they also agree to skip the home inspection, offering to buy the house no matter what.
That's a blinking red light for Bill Wheaton, a housing economist at the Massachusetts Institute of Technology.
"Don't buy into a frenzy," Wheaton cautions. He says if you can find a house you can afford that you like, and you're planning to stay there for five years, buying makes sense.
But that is getting much harder to find. He says if you factor out inflation, the past one-year gain in home prices nationally is about 10%.
"It's never been that high," Wheaton says, "ever in the last 50 years, so there's really something going on."
Since the last housing crash, Wheaton says the country hasn't been building enough homes. And now there's a record low supply of homes for sale. Some builders went bankrupt, and workers found other types of jobs after the crash. Zoning rules can block construction of more affordable units. And the price of lumber has been soaring.
Meanwhile, interest rates are low, and with the pandemic people want more space. So there's plenty of demand.
Wheaton says, after a few years, builders in many areas will eventually catch up and there will be more homes from which to choose.
"At some point supply will kick in," Wheaton says.
Johnson and Ametrano in Boston don't want to wait a few years. They're trying to stay sane, but the other week they bid $100,000 over asking on a house listed at $699,000. And they still didn't get it.
"We've become those really aggressive people!" Ametrano says jokingly, though she adds they're not waiving home inspections or going way over their budget.
And the couple now tell us, since they first spoke to NPR, they've just had an offer accepted on a condo. It's in a building with a bunch of units, which was a compromise. But they say they like it, it has a nice big porch, lots of light, and they're hoping to close in a few weeks.
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