Review of all things Real Estate
Last updated 2/1/2023 at 12:22pm
I read the article below and I’m not surprised given the level of “craziness” in the real estate market the last 2 ½ years. Buyers were in a frenzy to purchase homes and were willing to remove their contingencies (protections) with the submission of their offers. Once the offers were accepted (always above list price and in competition with multiple other offers) buyers were happy that they “won.”
Buyers made their purchase decisions based on their own assumptions/motivations and now 75% are unhappy (which is not surprising considering buyers had to make real estate purchase decisions in less time than most of us take to buy a pair of shoes).
But here’s another point of view, buyers who bought at the height of the market purchased with mortgage interest rates of 3% which will save them a lot of money over buyers who purchased in October 2022 when prices were “softer” but interest rates were up to 7.3%.
The good news is the market is steadying, interest rates are sliding down (currently around 6.3%) and prices have leveled off, so unless people purchased in the last half of 2022 they will be okay (unless there is a full blown recession then all bets are off).
Buyer’s remorse is rampant among pandemic purchasers
Melissa Dittman Tracey
Contributing editor for Realtor Magazine
A large crop of unhappy homeowners is emerging after having time to settle in with their hasty pandemic purchase in the last couple of years. Buyers at the time were bidding up home prices to beat out fierce competition, and many waived the home inspection or appraisal to get the house they wanted. But now they may regret the extremes they went to for a home: More than three-fourths of U.S. homeowners who purchased in the prior year expressed regret about their decision.
The top reasons for their regret: feeling like they overspent (30%) or rushed the homebuying process (26%), according to a separate survey from Hippo. About half of recent home buyers surveyed said that homeownership is more expensive than anticipated; too much maintenance and upkeep, and they compromised too much for their home.
The ultra wealthy are having regrets too. About a quarter of luxury buyers who purchased a home in the last two years say they are not satisfied with their property because of lifestyle changes, property size, remote location, lack of neighborhood amenities or a return to full-time office work.
Many homeowners surveyed said that knowing what they know today, they would’ve bought a different home (64%) or waited longer to buy (63%). Further, more than a quarter of homeowners said that selling their current home has become a bigger priority for them.
“With the insatiable buying frenzy and quick decisions being made, there were bound to be stories of regretful buyers who leaped too quickly into unknown environs,” Diane Hartley, president of the Institute for Luxury Home Marketing. “These buyers may end up staying in place and renovating, or they may be encouraged by rising inventory levels in their local marketplace this year and relist their current home for a profit. Others, if they have the financial means, may simply choose to keep the home as part of their investment portfolio, convert it to a rental and make a lateral move to a different, more affordable market.”
But others may try to stick it out and remake the home into something they can be happier with. Fifty-five percent of homeowners said they plan to make upgrades or home improvements to their home in 2023, according to the Hippo survey. They’ve budgeted an average of $11,173 for home improvements and upgrades this year.
Some of those home improvements may be needed: Homeowners say some of their home purchase regrets stem from unexpected repairs. They may have waived their home inspection and weren’t fully aware of what they bought into. More than half of homeowners said they have had something unexpectedly go wrong since they purchased.
The regret and the repairs are also affecting their happiness, the study finds. More than 60% said their mental health or their relationship with their partner has been affected, the Hippo survey found.
“Often, homeowner regrets begin to surface when unexpected issues and financial strain piles up,” said Courtney Klosterman, home insights expert at Hippo. “The bottom line is homeowners need help. The past year of growing economic and financial instability has taken a toll on homeowners and their well-being. With rising costs of labor and materials, when one thing goes wrong, it brings a wave of anxiety and dread about what could go wrong next.”
But those who do fix up their home may find it will lessen their buyer’s remorse. The survey notes that 77% of respondents said completing home maintenance and repair tasks increased their sense of pride in homeownership and proved a motivation for them to stay.