New Home Buyers Reveal What It Took to Land a House in Today’s Market

Americans view homeownership in high regard. In addition to providing tax benefits and a more permanent place to live, owning property is a wise way to invest your money. 

The market has reached unprecedented levels of competition over the last couple of years, but one thing is clear: People still want in on homeownership. While it isn’t easy, home buyers are making it happen, even if they don’t end up in their dream house.

To learn more about what it takes to land a home in today’s market, the real estate website Anytime Estimate conducted a survey of 1,001 Americans who purchased a home in 2021 and 2022. Here is what stuck out in the findings.

1. The Determination of First-Time Home Buyers

Among those who bought a home in 2021 or 2022, 70 per cent of them were purchasing a house for the first time. Most of these buyers were millennials looking for a place to start a life and grow their families.

Considering just how competitive the market is, buyers showed relentless determination. Roughly one-third of the survey respondents (32 per cent) said the process was more difficult than they expected.

Gone are the days of taking your time to look for the perfect home, thinking before putting in an offer, or even having an offer accepted on your first try. 

To put this into perspective, 80 per cent of home buyers surveyed made more than one offer. In some cases, even the second, third, and fourth options didn’t work out for buyers. In fact, 41 per cent said they made five or more offers before landing a house.

Because the market has been so competitive, house hunting has also been rather unconventional. In the past, you wouldn’t dream of buying a house sight unseen. Today, more than 1 in 3 buyers (36 per cent) made an offer on a home before stepping foot inside.

These home buyers decided to put in an offer based on photos, virtual tours, and advice from their real estate agents. Because houses have been flying off the market so fast, many buyers feel a sense of urgency when they find a home they like. 

2. Changing Plans and Priorities 

The compromise was essential for those who weathered the competition to find a home in today’s market. 

Many buyers had to change what they were looking for, settling for a different floor plan or home size than they wanted. In addition, many buyers said they also had to go over budget. 

Even when adjusting their expectations, finding the right house took some time for recent buyers. Roughly 1 in 3 buyers (32 per cent) in 2021 and 2022 spent at least three months looking for a home, and about 1 in 8 (12 per cent) said it took six months or more. Unfortunately, that wasn’t due to buyers being overly picky.

About 80 per cent of home buyers had to compromise on their priorities, which meant very few people came away with exactly what they wanted. For example, half of the buyers (50 per cent) said a good neighbourhood was their main concern, but 20 per cent said they had to settle for a home in a worse location.

3. Crunching the Numbers 

In addition to shifting timelines and priorities, prices have been exceptionally high. Nearly one-third of home buyers (31 per cent) paid over the asking price to win among competing offers. The median amount buyers paid over the listing price was also hefty, coming in at $65,000.

Looking at properties across the country, the national median price of a home is $428,700. That number was even higher for survey respondents. The median amount they paid was $495,000, about 15 per cent higher than the national median.

How did these home buyers make it happen? Let’s look at some statistics regarding the financing in these deals:

• 1 in 10 buyers (10 per cent) paid for their home in cash, with nearly half of them saying they make enough money to afford to do so.

• Nearly 30 per cent of all-cash buyers said they had to withdraw money from savings, and 27 per cent had to borrow funds from their investments.

• For those who financed, 40 per cent of home buyers put down 20 per cent or less.

The numbers show that there is power in being a cash buyer, even if they aren’t offering the highest price. What is more, we see that very few people can afford to buy a home without financing.

4. Financing Trends

As previously mentioned, it is rare for home buyers to make all-cash offers. Financing remains an important part of the process when purchasing a home.

Among the buyers who financed their new homes in 2021 and 2022, the most popular type of loan was a conventional mortgage. Nearly 1 in 3 buyers (30 per cent) chose a 30-year loan. This remains the most popular option for buyers, especially among those buying a house for the first time. 

Alternatively, 21 per cent of survey respondents chose a 15-year loan. When taking this route, monthly payments are higher, but these mortgages typically have lower interest rates. This is an attractive option for home buyers who are seeing rate hikes in response to inflation.

For those who are juggling debt due to student loans or credit cards, mortgages insured by the Federal Housing Administration (FHA) continue to be popular. A third of buyers (33 per cent) took advantage of the perks of these types of loans.

In addition to being less strict regarding credit requirements, borrowers can put down as little as 3.5 per cent. 

5. Home Buyer Regrets

Perhaps the most interesting aspect of the survey examined regrets among 2021-2022 home buyers. 

Competition among buyers has made it nearly impossible to take time to think before putting in an offer. While people used to mull over their options for a few days, the current market demands quick decisions.

The result? About 72 per cent of survey respondents said they have regrets about their home purchase. The top concern was spending too much, which can lead to a mortgage payment that strains monthly finances.

Here were the other top concerns:

• Bought too quickly.

• Bought a home that requires too much maintenance.

• Bought a fixer-upper.

• Feeling pressured to make an offer.

Overall, it seems the hasty nature of the market led to quick decisions that people weren’t always comfortable with — such as committing to a fixer-upper.

In markets that tend to be more expensive, many buyers feel like a fixer-upper is simply the best they can afford. More than half of the buyers surveyed purchased this type of home in 2021 or 2022. 

Unfortunately, this doesn’t mean it was a bargain. In fact, buyers who purchased a fixer-upper reported spending more than those who bought a newer home. The obvious downside here is that repairs and maintenance will drive up the amount of money you spend in the long term.

How to Improve the Process For Home Buyers in Today’s Market

Although the home buyers who were surveyed forged ahead to make a home purchase, the overall sentiment was that it wasn’t a great experience. As mentioned earlier, about 1 in 3 (32 per cent) found it to be more difficult than expected, leading to stress and anxiety. 

Here were the top concerns:

• Expensive home prices

• Difficulty finding a home

• Too much competition

If you are hoping to buy a house in the current market, you might wonder what you can do to make the process a bit easier (or at least more enjoyable). Here are a few tips.

1. Interview Real Estate Agents

Hiring a realtor comes with pros and cons, but overall, it helps to have knowledge and expertise in your corner. A realtor will keep track of the tedious documents you have to review and sign — in addition to negotiating on your behalf.  

Alternatively, an inexperienced or unprofessional real estate agent can hold you back. It’s important to interview several people before you decide who to work with. This is the best way to ensure good communication and a great working relationship. Whether you are buying or selling a home, the guidance of a realtor can improve the process. 

If you are concerned about extra closing costs, consider low-commission real estate agents. Most states also allow home buyer rebates, which allow you to pocket a portion of your buying agent’s commission.

2. Consider Your Home Financing Options

Home financing is not one-size-fits-all. Many people worry about saving enough for a 20 per cent down payment, but there are loan options that defy this old rule. 

FHA loans allow for much smaller down payments, while VA loans for veterans and service members allow buyers to purchase without any down payment. 

Don’t make a purchase you can’t afford. Look at your budget, and research all your options before deciding. In some cases, it’s better to hold on to the cash in your savings account and have a higher monthly mortgage payment. 

3. Be Flexible 

Flexibility is the name of the game in this seller’s market. 

With inflated prices and increased competition, the market can be tough to navigate. Remain open to a home or location that may be different from what you had in mind. This will help you make a financially sound decision.