New Yorkers looking to buy a home struggling in current housing market: "It's always a dead end"
NEW YORK -- Sky-high mortgage rates, dwindling inventory and sellers expecting to get more than their homes are worth have some families worrying it could all represent the death of the American dream.
Navy wife Doslyn Rodrigues has lived all over the world, but all she wants now is a home in Brooklyn for her and her two boys while her husband is stationed in Maryland and she attends law school.
"In my free time when I should be studying for my exams that's quickly approaching, I'm going out to look at houses, and it's always a dead end," Rodrigues said.
Rodrigues is already approved for a $1 million loan and says her wish list isn't long, and still, she can't find a home to buy.
"I saw another house on East 87th, too. The seller was selling the house for $1,050,000, then they raised the price to $1,200,000," she said. "It occurred to me that this is just, like, a game, too, on the seller's part. When I offered the million dollars, they came back and said, oh, can you add $150,000 more onto that? ... I am just frustrated."
Housing attorney Altagracia Pierre-Outerbridge just sold her apartment in Manhattan and bought another. Even for someone with her expertise, the process was exhausting.
"Giving documents, income documents. As a self-employed person it was also even trickier, right? Projecting income, making sure you can afford the home, visiting different homes, homes going off the market while you're still under consideration, bidding over the next person. It was very hectic," she said.
"It's tense, and it's a challenge, and it's honestly scaring some people," said Steven James, president of Berkshire Hathaway Home Services.
James says the current housing market is crippling under the weight of low inventory, high demand and many unmet expectations.
"If you're a seller who really wants to sell ... now you have to wrap your mind around the idea you're not going to get the price that you thought it was worth, and you're not sure exactly what you're going to get. And the buyer is wanting to do it because they have this pent-up demand to do it, and all of a sudden the interest rates have basically doubled in the span of a year," he said.
James has a few key tips to put buyers in the driver's seat:
- Work with a reputable agent who can help find homes even before they hit the market;
- Expand your search;
- Be willing to consider homes that don't check all of the boxes on your list or are outside the original area you were looking;
- Make an offer, even if it's below asking, just to put yourself in the running;
- And most importantly, get your financial affairs in order before you start looking.
"You're going to compete against other buyers. Well, OK, you may not be paying all cash, but you may have a situation where you can close a lot faster. You've gone to the bank, you've talked to the mortgage lender. You know that you can move quickly when you find something to go to contract," James said. "Once you get the accepted offer from the seller, make sure that you already have an attorney in the wings to negotiate your contract or sale because the sooner the seller signs that contract, the closer you are to securing the home of your dreams."
Financial experts say they're hopeful interest rates will drop in 2023, but many lenders are waiting to see how aggressive the federal reserve will be in fighting inflation, which could cause rates to rise again.
Back in Brooklyn, Rodrigues says she's exhausted, but not giving up.
"I'm very optimistic. I'm keeping my hopes up, and I'm trusting that I will find that right home at the right price," she said.
The lowest 30-year mortgage rate ever was 2.65%. Current rates sit at 7%. That difference means buyers will pay tens of thousands, even hundreds of thousands of dollars, more over a 30-year mortgage.