Getting Real About Real Estate
Here are 5 tips to help avoid home buying remorse in 2022
A few months into the global health pandemic in 2020, the U.S. housing market began a wild ride that saw values rising sharply as sellers raked in more for their homes than ever before and buyers launched bidding wars, sometimes paying hundreds of thousands above the asking price. Unfortunately for buyers, little has changed in the two years since people began seeking more space outside city centers.
Inevitably, those who feel pressured to buy a home in this less-than-ideal market – with historically low inventory – could end up with some remorse about what is often the biggest purchase of their lifetime. A Zillow research study published in February 2022 found that 75% of recent buyers have at least one regret about their new home. Among the findings, 32% of those surveyed reported their home needed more work or maintenance than they expected, while 22% of buyers noted they don’t really like their home’s location or neighborhood.
Here are some tips to consider before locking in your next 20-year mortgage:
Don’t skip the home inspection
In the haste to land a beautiful home, some buyers have given up an inspection before purchase. Unfortunately, not all sellers are scrupulous when it comes to hidden damage, and not all damage is obvious. Which means unless someone crawls into the attic to check the roof for leaks, you may not realize how many hidden costs you will be on the hook if water damage or mold becomes an issue. While it might be tempting to waive the home inspection, it could mean a mountain of repairs you weren’t expecting to pay for.
Pay attention to the comps
If you use a real estate agent or broker, they should have a list of comparable homes in the area, also known as a comp, to let you know what other homes are selling for. Ideally, you don’t want to pay significantly more than the home is worth and above the comps, or more than a financial institution will loan you for the property.
Don’t forget about taxes, insurance & maintenance
When budgeting for how much a home will cost each month, or even annually, it’s vital to add property taxes and homeowners insurance to the mix. Depending on the age of your home, what state you live in, and how close you are to the coast, your mortgage payment could increase by hundreds or more each month.
Consider post-pandemic commutes
Many people have been working from home or enjoying hybrid work arrangements for the better part of two years now. As companies begin calling employees back to the office, it’s important to consider commute times, gas prices and even traffic patterns, when selecting a home. Visit the home you are thinking of buying at different times of day to see how congested the area around it is. You can also drive from the home to your office in the morning or when you would typically leave work in the afternoon to get a realistic idea of how long your commute will be. If you have school-age children, also consider the amount of time it will take to shuttle the kiddos to and from school or daycare from the potential new home. You can also plug the addresses of the home and your office into Google maps for an estimate of drive times.
Try to be patient
If you aren’t immediately in need of a new home or apartment, try to love the space you are in for a bit longer. Some relief appears to be on the way. Research from Zillow shows the U.S. housing market is expected to begin to return to pre-pandemic 2019 norms, at least in terms of inventory available, by 2024. So bide your time, and use this opportunity to save up for a larger down payment when more homes likely will hit the market in the next 18 months or so.
Jean Chatzky/SavvyMoney with reporting by Casandra Andrews