In today’s competitive real estate market, buyers are rushing into deals. Even if it doesn't fit their budget or needs.
It's causing a lot of buyer’s remorse, especially in millennials.
This group already has it hard in some ways. Millennials are dealing with their second housing crisis in 12 years.
And record numbers are nearly getting priced out of the market in large cities like Dallas-Fort Worth.
“We watched the 2008 recession happen and a lot of us grew up through it. A lot of us were affected by it. I was, too. But we’re looking at it and saying, ‘Maybe the prices will continue to go up and I’ll just be priced out of a home forever,’” said Daniel Butbul, a millennial homeowner and an associated broker with Ambiance Realty Group JPAR.
He said in the last couple of weeks, he has seen several contracts fall through because they were first-time homebuyers who weren’t really sure about the house they wanted.
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“This market is moving really fast. Sometimes you’ve got 20 to 30 minutes with the house. Maybe you’ll schedule a second showing and you’ve got an hour with the house before you need to put in an offer,” he said.
It’s that pressure to act fast in this frantic housing market that's causing some regret and anxiety in millennials. Butbul said they’re lucky Texas has an options period to let them back out before they committed.
But the market frenzy and low inventory has forced others to rush into deals.
The Bankrate survey shows the biggest regret was not being prepared for maintenance and other costs associated with owning a home.
“At the end of the day if you’re buying a home, you usually find that you want to live in a house for at least five to seven years to make it worthwhile over renting,” said Butbul. “Is this a place that you see yourself living for the next half-decade?”
More than 20% of millennial homeowners said they felt the costs were too high. That number jumped to 26% for younger millennials ages 25 to 31.
"You might want to spend some time with your lender looking at your payment affordability. Make sure that there are other things your lender isn’t calculating for you,” warned Butbul. “They will check your principle, interest, taxes and insurance. However, they will not factor for what it's going to cost you to hire someone to mow your lawn, maintain your pool. Or buy chlorine – there’s a major chlorine shortage! HOA, general things breaking – that’s something you want to budget for as well.”
So how can anyone, especially millennials, avoid those regrets?
Butbul said, first take a breath and find a balance.
“Balance pacing yourself but also keeping up to speed with the fast-moving market,” he said. “A lot of the time, that might mean that you lose out on some houses but of course, take your time. Just remember the pace of this market.”
It’s also important to work with an agent who understands the market. Be ready to make some sacrifices but stick to your standards on the things you absolutely want.
And take the time to see whether your home is somewhere you’d be comfortable living even if it’s not your dream property. Never rush into a deal just if you haven’t even seen the house enough in person.
“How do you feel about the location? Especially because equal housing law restricts a lot of realtors from pointing you to one neighborhood over the other. We have to stay neutral about where the house is and you have to tell us where you want to live,” Butbul said. “Drive through it a few times. Does it have the amenities, the businesses and traffic levels you want? Is this the place that you want to live?”
Unfortunately, experts say the U.S. housing shortage is not getting any better, at least for the rest of the year. Data shows a shortage of nearly 4 million homes.
“This winter and spring was probably just about the craziest time that I’ve seen — and I’m second generation in real estate so I’ve been watching this North Texas market for a while. We’ve had a really crazy off-season this year,” said Butbul. “We think it might with the current amount of buyer demand, this might keep going. We don’t see an end to this. I don’t see prices dropping. I see them either plateauing or going up. So I don’t know if there’s necessarily worth waiting. There’s always the chance that you might end up pricing yourself out of another neighborhood. I think it really all depends on what happens to the interest rates and general home affordability in the economy.”
In North Texas, where there should normally be six months of inventory, is sitting at just one month.
"Don’t time the market. Find the time that makes sense for you to get in,” Butbul said. “At the end of the day, if you’re going to live in this place in the long term, over the course of seven years, it’s not going to make much of a difference if you overspend by 10 or $20,000."