Title: Navigating the Challenges of Home Buying in a Hot Housing Market: How One Family Succeeded
Subtitle: Jessica Geren and her Husband Share their Experience Throughout the Process
Date: [Current Date]
In a highly competitive housing market, finding the perfect home can be a daunting task. Take the case of Mandy and Jordan Picchiottino, who tirelessly searched for their dream home in the Atlanta suburbs for nine months. Their perseverance paid off, as they successfully outcompeted other buyers to secure their dream home. Here’s how they did it.
According to a recent report by Andrea Kramar in USA TODAY, the Picchiottino family faced a challenging housing market plagued by rising interest rates and high prices. Despite the discouraging statistics, they were determined to find a home that fit their needs.
Similarly, Jessica Geren and her husband, Matt, faced a similar situation. To afford their new home in Croton, New York, they made the tough decision to trade their existing 2.75% mortgage rate for a 5.5% adjustable-rate mortgage. This option provided them with a fixed interest rate for the first five years, after which it could switch to an adjustable interest rate. Although it came with certain risks, it was a necessary compromise to make their budget work.
While many potential homebuyers and sellers prefer to wait on the sidelines, the Gerens and the Picchiottinos decided to take the leap. Some are motivated by the elimination of remote work options in various sectors, while others are seeking lower-cost areas to counterbalance high interest rates. However, the current conditions pose significant challenges for first-time buyers looking to enter the housing market.
One of the major hurdles faced by homebuyers is the steady increase in mortgage rates. As of July, the 30-year fixed-rate mortgage stood at 6.8% and has since climbed even higher. In September, it reached its highest level since 2000 at 7.3%, according to Freddie Mac. Concurrently, home prices continue to rise, with the median sales price surpassing $400,000 for the third consecutive month.
To stay ahead in the competitive market, the Gerens took an unconventional approach and allowed the sellers to stay in the house for an additional month by renting it back to them. This gesture set them apart from other interested buyers.
However, this decision meant that the Gerens had to spend weeks without a permanent home, which was both challenging and exhausting, as Jessica Geren, an adjunct college professor, described. Despite the hardships, the compromise was necessary to maintain their family unit and avoid the exhaustive commute between their old home in Connecticut and Matt Geren’s new job in New York City.
The scarcity of housing inventory has also contributed to the inflated home prices. Total housing inventory decreased by 0.9% from July and 14% from the previous year, leaving an insufficient number of homes for potential buyers. This lack of inventory resulted in bidding wars, with demand surpassing supply and driving prices higher.
Stacy Levy, the Gerens’ realtor, explains that the current market is still favorable for sellers. Well-priced properties generate multiple interested buyers, leading to increased competition and higher prices. However, overpricing a house can lead to it languishing on the market without attracting buyers.
Fortunately, the Gerens benefited from the equity accumulated in their Connecticut home over the years. Despite downsizing in terms of square footage, they managed to sell their previous 7-bedroom property for $825,000, which provided them with the necessary funding for their new home.
Not everyone has the luxury of equity to rely on, making the current market particularly challenging for first-time buyers. Low mortgage interest rates, below 5%, have discouraged current homeowners from selling their properties and moving to homes with higher interest rates. Unless individuals can sell their existing homes at a considerable profit or relocate to low-cost areas where they can finance their mortgage primarily with cash, many are hesitant to enter the market as buyers.
For Jessica Geren, accepting an adjustable-rate mortgage came with its share of worries, but it was the best option available given the high mortgage rates. She and her husband plan to refinance their mortgage in the future, hoping for more favorable terms.
Despite the hurdles and intense competition, families like the Picchiottinos and the Gerens have managed to find and secure their dream homes. Their stories demonstrate the resilience and determination required to navigate a challenging housing market.
Swapna Venugopal Ramaswamy, the housing and economy reporter for USA TODAY, has been closely following the dynamics of the housing market. For more insights and updates on the evolving housing market, follow her on Twitter @SwapnaVenugopal.
Note: This article is based on the content originally written by Andrea Kramar for USA TODAY.