Should you buy a house now? It the market too high? Will it only go higher?
In the 24 years we have lived together, my wife and I have purchased a New York City-area co-op, a condo in that same market, four houses in Connecticut, a vacation condo in West Palm Beach, Fla., a luxury condo in a West Palm high-rise, a manufactured home near Disney, and, most recently, a resort condo that’s also just outside of Walt Disney World.
Currently, we live in a rental townhome because we needed more space during the pandemic and we essentially cashed out our residence so we could buy our vacation/investment property without a mortgage. Now, with our son graduating from high school, it became time to buy a new home.
We have experience, but we’ve never seen a housing market where listings go under contract before we even read the emails showing them as going on the market. And while South Florida may be especially hot as a real estate market, it’s not atypical. Many of the problems we faced will be similar to the ones anyone has to deal with.
Image source: TheStreet.
How Do You Decide Where to Live?
Your budget plays a pretty big role in where you plan to live. My wife and I considered two very different budgets about $100,000 apart. We’d be willing to spend the higher amount if we could meet our wants — a townhome or a single-family home, not a condo in a building — in roughly the part of southern Florida we currently live in.
If we couldn’t find that, we planned to spend the lower amount and move either about half an hour north, but still on the coast, or to central Florida, where prices are much lower than they are in South Florida.
We needed three bedrooms, wanted four, but were willing to settle for three with an area we can use as an office. Our Realtor — a longtime friend who has worked on multiple transactions with us — took down what we wanted and began sending us listings.
It fairly quickly became obvious that what we wanted at the higher end of our budget existed only in theory. Listings would pop up, but they’d be gone before we could see them, and one went under contract while we were looking.
If we wanted to stay exactly where we live now, we would need to spend more money, have less space, or live someplace that needed a lot of work. That made the where part of our decision fairly easy and we shifted our focus about 45 minutes up I-95 to the Port St. Lucie area.
TheStreet
What’s It Like Buying a House in a Hot Market?
My wife and I also own a resort property, a two-bedroom condo, near Disney World. When we bought that, we had identified the resort we wanted to own in and began making offers — sight unseen. We were cash buyers and still lost out on multiple properties we bid on before finally landing a condo we’re happy with as a rental/vacation home.
We never expected the same thing to happen when we bought a new principal residence, but that’s exactly what happened.
Once we began looking north of where we lived, in a section of Port St. Lucie called Tradition, we began tracking listings. We went to see a few before we made an offer on a three-bedroom single-family house that needed pretty much a full interior renovation.
We made a quick offer slightly below asking, which we raised to asking at the suggestion of the listing agent. Perhaps we had a chance or more likely we were used to drive up the offer from the cash bidder who eventually bought the property.
While that was happening a similar home came up for sale in the same community at a $30,000 lower asking price. Based on a few very vague pictures we offered $20,000 over asking, and in about 36 hours were under contract to buy a home — a pretty major purchase — without having actually seen it.
That’s a tad atypical, but knowing we would likely have to redo everything anyway (we absolutely do) made it seem less risky and really the only way we could get a property in the current market.
As a buyer in a hot market, we also knew we had very little leverage and we made our offer reflect that. In addition to going over the asking price and making the offer without having seen the property, we also:
Agreed to cover any difference between the appraisal and the agreed-upon price.Essentially took the home “as-is”Took on a tenant who has 90 days to vacateAgreed to handle title (which the seller normally does)
Had we not done all these things, the seller very likely would have held our offer and waited to see if anything else came in. With houses going under contract in a matter of hours, our Realtor felt that aggressive was our best angle, so that’s how we played it.
And ultimately, while our pending new house (which we finally saw during inspection) had a lot more cat pee in it than we had hoped for, it will eventually — after we rip the carpet out and paint everything — be a home we can live in for a long time.
So, Is It a Good Time to Buy a House?
It’s clearly a seller’s market, which makes things very challenging for buyers. Buying a house right now — at least in areas with hot real estate markets, which is most places — takes creativity and preparation.
You have to know what you want and, on occasion, be willing to make some scary leaps of faith. The problem is that while this might not be the time to move just because you want to, many people buy a home becasue they need a place to live and fear that prices will keep going up, eventually pricing them out of the market.
That’s exactly where we were. We live in a pricey rental and wanted to stay at least somewhat close to family in South Florida. It was not an ideal time to buy, but we suspect that our new home will look like a steal a few years from now.
