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A Florida real estate agent received 36 offers on a home recently. Among the offers, 13 were for more than the asking price, 12 were at least $15,000 above the asking price, six waived home inspections, four offered to rent the house back to the current owners until they moved, and 11 agreed that even if the house appraised at less than their offer, they would still give the owners the extra cash.
Surrendering the right to renegotiate if the house appraises for less than was offered means “you don’t have a right to walk away anymore,” Austin real estate agent Sean Waeiss told Business Insider.
“The problem with this is, we’re not missing appraisals by $10,000 — we’re missing appraisals by $50,000, by $75,000, by $90,000,” he said.
The Florida story, related by Business Insider, and Waiess’s comment illustrates a dominant rule in today’s overheated housing market: cash is king and first-time home buyers, and those without bulging pockets, are increasingly locked out. (See “Home Prices Climb, New Starts Reach 14-Year Record,” Trends Journal, 20 April, 2021.)
“Somebody between the ages of 25 and 35, they’re a first-time homebuyer, they’ve saved up a good chunk of cash for their down payment — maybe it’s $50,000, maybe it’s $100,000 — they can’t buy…right now…because they’re not cash-rich,” Waeiss said.
“They could probably afford the monthly payment. They have good income. They have a good nest egg. But it’s not enough,” he said.
TRENDPOST: Not only rich households but also investment companies are laying down cash and snatching houses away from less well-heeled families, as we reported in “Invitation Homes to Buy $1 Billion Worth of Houses This Year” in our 1 June, 2021, issue.
Today’s housing market is helping to ensure that Bigs own more and more assets, while everyone else must compete for a share of the leavings.
TREND FORECAST: The housing market will remain strong since demand is much greater than supply. However, it will decline as interest rates rise, but unlike the Panic of ’08 when subprime mortgages helped crash the markets, this time, home prices will only moderately decline.