More houses on the market but interest rates make homebuying hard
BURLINGTON, Vt. (WCAX) - Spring is a busy season for real estate, and one Vermont realtor said there’s a lot more inventory this time of year. But for some, buying a home has been a multiyear process.
Vivianne Farmer spent nearly two years finding her home in Vermont.
“A home that fits the criteria that I’m looking for shows up maybe every two or three weeks and then when you go to look at the home, often, you go in and there’s already three or four bids before you’ve even seen it. And it’s only been on the market for 24 hours,” Farmer said.
Farmer lived in Vermont for about 30 years and moved to New York City for a job opportunity five years ago. Now, she works remotely and wanted to come back to the Green Mountain State. She’s in a rental property. Rentals are also hard to come by in general.
“I can tell you is I look at Zillow every single solid day,” said Farmer.
She’s bid on several homes so far and has stretched to the maximum price she can, and has still been outbid.
“The scarcity of choice. It used to be you worked with a realtor, they popped you in a car, and in a weekend you saw 10 homes and you were done. You picked one and you moved on. Now you can’t do that,” said Farmer.
She’s been working with Isaiah Donaldson, a realtor with Conroy Group at KW Vermont.
Both he and Farmer note there have been more homes available popping up in recent weeks. But the past few COVID years have caused a drastic interest rate change. Pre-COVID interest rates were at 5%, now they are at 7%.
Because of that, Donaldson says some buyers’ budgets are lower than they would have been a few years ago. Additionally, many who locked in lower interest rates aren’t looking to leave the home they’re in, in part causing a shortage at an elevated state.
“You have those people you’re working with for a long time. And let’s say two years ago, their budget was $800,000 because we were looking at interest rates at 3%. And now we’re looking at a budget of $600,000 because their interest rates more than doubled,” said Donaldson.
He said there’s a mixed bag of homebuyers now, ranging from making an offer and receiving a bid after looking at one house, to one client who saw 57 homes and made 42 offers just a few months ago. On average, Donaldson said clients will make around five to 13 offers.
“I’ve also had buyers that can’t afford a house anymore because interest rates have now more than doubled. So they’re out of the game right now,” said Donaldson.
During the early days of the pandemic, homes would only be on the market for only 3-5 days, an environment that wasn’t conducive to open houses.
“Now we’re anywhere from 19 to 24 days on market. So we’re seeing more open houses kind of pop up. It’s a good marketing material because it’s a chance to get people in the house,” said Donaldson.
After searching for two years, Farmer is officially under contract.
For this upcoming busy season, Donaldson said prospective buyers can expect a more in-person, slower real estate style as opposed to the past two years when electronic communication was prioritized.
He also predicts a higher uptick in multifamily and investment properties because a lot of first-time buyers are showing interest in renting one of the units to pay for the house.
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