The 2021-2022 Great Real Estate Rush was a sight to see. With things cooling down, many homebuyers have regrets.
U.S. homebuyers spent two years giving up leverage, overpaying for houses, and rushing through short cuts to land new properties.
Now, many of those buyers have regrets.
Who didn’t see this coming?
The data come from a report from Clever Real Estate, which says that while the American dream of owning a home still resonates, many Americans who purchased a property between 2021 and 2022 refer to the experience not as a dream but as a nightmare.
The No. 1 reason for buyer’s remorse: 30% of respondents said they spent too much money.
The second most common regret was rushing the home-buying process, with 30% saying their purchase decisions were rushed and 26% indicating they bought too quickly.
American Dream Morphs Into Nightmare
One silver lining is that homebuyers aren’t giving up – even though the data paint a dark portrait.
“The American dream of owning a home is still alive and well,” the report stated. “Despite high prices, low inventory, and fierce competition over the past two years, buyers have persevered through the challenging market.”
Even so, few came away with their dream home, Clever reported. “That was especially the case with first-timers who accounted for 70% of buyers in 2021 and 2022,” the report noted.
“Of those, two-thirds (66%) were Millennials who were eager to own homes to raise their families.”
That’s just the tip of the iceberg. These statistics tell an even more harrowing tale.
· Almost a third of buyers (31%) paid over the asking price. The median amount buyers paid over the listing price was $65,000.
· 80% of buyers made more than one offer, with 41% making five or more.
· More than one in three buyers (36%) made an offer on a home sight unseen.
· One in three buyers spent three months looking for a home, while one in eight spent six months or more.
· 80% of home buyers had to compromise on their priorities.
· 72% of new homebuyers have regrets about their home purchase, with 30% saying they spent too much money.
The report also noted that first-time buyers paid a median of $77,000 over a house’s listing price. Meanwhile, repeat buyers clocked in at the $60,000 range.
Fools Rush In – but Time Heals Wounds
Real estate experts say that when you’re buying a home, shortcuts are never a good idea.
“Buying a house is a long-term investment and it works best when done the right way,” said Alex Capozzolo, co-founder of Brotherly Love Real Estate in Philadelphia. “Many of our clients now express that they should have waited for market conditions to get better. “
Rushing into a home purchase is a disaster waiting to happen.
“New homebuyers need to be aware and conscious of the choices they are making,” Capozzolo said. “The deal must only be done when everything is thought through and due diligence has been conducted.”
Other real estate experts say that time heals all wounds and that taking the long view is the way to go for regretful homebuyers.
“Many homeowners forget to look into the future and what home values do over time,” said Allison Timothy, buyer agent at Homie Utah.
“Homes are still increasing in value over the long haul. Real estate is, and was, a good place to put money. During a market cool down, a lot of homeowners may feel like they paid too much when in reality they made a good decision.”
“Real estate is always a good place to put money as long as the homeowner is in it for the long term,” Timothy added.
While a reality check may be in store for frustrated homebuyers, the sky is not falling even though some values may be adjusting, Timothy said.
“For their next home purchase, homeowners should be mindful of inspections, five-year trends on appreciation values, as opposed to one-year price appreciation,” she said. “It may take a few years, but the value will come back and keep going.”
“Real estate is usually a slow-growing investment,” Timothy added. “For now, hold tight, be patient and love your home.”