A report that first appeared in Yahoo! detailed exactly what we are seeing here in South Florida in regards to the real estate market. It's not slowing down, but the pandemic is making it difficult. The problem that buyers are having now is something that was never a problem in the past: access. Getting into properties due to social distancing guidelines has become a nightmare, and it's also brought out the competitive nature of pesky buyers looking to score their dream home in any way possible.
The Current State of Buying Homes in the Summer of 2020
The report detailed how Laura Galeazzo, a running coach at an online service for runners, had viewed dozens of homes and even made offers on three of them, only to be outbid. The 33 year old Rochester, New York based Galeazzo fell in love with a colonial style home that she and her husband bid on at an open house. However, a couple said to be in their 50's ended up with the home by standing in front of the home waiting for the open house to end so they could beat other families to make offers. They even parked their car in the driveway so that no other people could access the property, and went as far as making an offer that was said to be $22,000 over the asking price of $234,000.
Since this happened, Galeazzo, along with her husband, continued to pass by similar homes in the price range they had set and began to look into the surrounding neighborhoods. However, when they started doing this, they noticed that they weren't the only people doing this type of due diligence. They constantly came across the same prospective buyers as they drove around looking at homes that they were viewing.
“My racing mentality kicked in. We need to beat them to the next house,” Galeazzo said. “It’s almost like you’re sizing up the competition for a bidding war. What if that five minutes it took to call your realtor made the difference?”
Mind you, this crazy buying process of running to buy homes before others can is during a time where we just reported that rental prices are starting to drop.
How Affordable Are Homes in the Summer of 2020?
If you are a new homeowner during the pandemic, it's becoming increasingly more difficult to buy a home. A larger down payment is often required since the lending standards have become more difficult with the pandemic going on. Lenders are looking for security when they lend money after all of the lay-offs that have happened because of the global criss.
With rates at historic lows, the buyers are also dealing with a low inventory and in most markets, higher prices. We're finding that home buyers are having to make quick actions and make offers and decisions rather quickly if they are dead set on a home, or risk getting other potential buyers into the mix and causing a bidding war.
Prior to the pandemic, low inventory was an issue. Now that the homebuilders aren't at their usual production the supply of homes is making things difficult. In fact, the inventory dropped 29% from just one year ago through the week that ended June 20, according to Realtor.com.
More than 40% of homeowners who purchased their home during the pandemic reported entering into a bidding war on at least one home
-Clever Real Estate
However, as home investors and buyers ourselves, we know how to work the pandemic and find deals. We previously said this may be the best time to buy real estate, and we are buying throughout this pandemic as are our mentoring students.
The report went on to say that the sellers have the upper hand, but in our world, we always come in knowing the advantages of each property we analyze and know that our investments are made in a sound manner. Contact us today if you are in South Florida and would like to learn more.