Stephanie Visscher is still in the game. But she is pulling her hair out.
Along with her boyfriend, the Denver public relations counselor has been looking for a house since early January, to no avail. Inventory is so scarce where she wants to live, and competition so stiff, that she hasn’t even had a chance to make an offer.
“It’s definitely been tempting to give up,” Visscher told me. “Everyone said you have to make compromises on your first home, but there’s nothing to compromise on. When I have gone to showings, it’s crazy.”
How crazy? Once, as the couple toured a house, the people next in line to see it knocked on the door to make sure they didn’t go beyond their allotted time. Visscher and her boyfriend went for coffee after the showing, and when they circled back by the place, someone else was peering in the windows, trying to get an early look.
Still, the couple keeps looking, hoping that something will magically appear that they can afford and that has some of the features they desire.
Buyer Fatigue Sets In
Many others aren’t as optimistic. They’ve thrown in the towel for now, figuring they’ll start looking again when the market loosens up.
In February, Florida agent Robert Goldman of Michael Saunders & Co. listed a house on a Monday, had offers that Tuesday and wrote a contract on Wednesday. One of the offers was from a woman who had already lost out on a couple of other houses, and when she was told she’d lost again, she had had enough.
“That’s it!” she screamed. “I’m done with this.”
Danielle Hale, chief economist at Realtor.com, calls the phenomenon “buyer fatigue,” noting that those who aren’t up to the scrum “can find the process draining.”
“Imagine getting excited enough to submit an offer on a home – quickly making what is likely the biggest purchase of your life – only to lose out to a higher bidder,” Hale told me in an email.
“Perseverance pays off,” she said, but added that “aggregate data suggest that some would-be buyers are likely putting their searches on pause so that they can regroup.”
Some buyers are turning to the new-home market, where sales are up nearly 20 percent from a year ago. But even that sector is not immune from buyer burnout.
Buyers of new-build homes may not be outbid in the way that resale buyers are. But if they decide to think on it, even just overnight, the house and lot they were looking at could be sold to someone else by the time they return the next day. So, they just give up.
According to researcher Rose Quint of the National Association of Home Builders, the share of buyers likely to give up until next year – or later – has jumped from 16 percent to 28 percent year over year. It’s the fourth time in four years that this percentage has increased, Quint reports.
According to one study, 44 percent of buyers found themselves in a bidding war last year. Of those, about half won.
The Keys to Victory
Buyers throw in the towel for any number of factors. Maybe they tire of racing out to see the latest listing, only to find it’s in terrible condition or in a less desirable neighborhood. Or perhaps they find the lending process irritating, if not impossible.
But in today’s high-pressure market, where being first with an offer isn’t necessarily the key to getting it accepted, the entire process can sap the energy out of even the most prepared wannabes.
“I’ve seen buyers back out for a variety of reasons – the stress. The emotions. The feeling of ‘they don’t stand a chance,’” said Ohio agent Donna Deaton of RE/MAX Victory+Affiliates.
Deaton said she “stood in the cold and the dark” on a recent Friday night at a new listing, waiting for her turn to take clients through.
“We were at least 20 people deep. We wrote an offer for $25,000 over list price and still lost out,” she said
Redfin economist Hale said that with prices rising like crazy over the last six months, it’s understandable that buyers become frustrated and start “reevaluating their options.”
“Buying a home is a roller-coaster of a journey in the best market circumstances,” she said, and “housing market conditions are especially challenging to buyers right now.”
New Construction Limited
Supply and demand are “out of control,” said Ohio agent Denton. Florida agent Christopher Carter agrees.
“The frenzy here for real estate is disturbing,” he said. “People just keep looking because for some reason, they feel they have to buy something.”
At last count, the National Association of Realtors put the inventory of unsold houses at a historic low of 2.3 months’ supply nationally – about a third of the six months’ supply that is considered normal. In Austin, Texas, the inventory sits a mere 0.7 months.
In the new-home sector, meanwhile, builders can’t get shovels in the ground fast enough. Some are sold so far in advance they are purposefully slowing sales.
As Holden Lewis at NerdWallet sees it, the lack of inventory is partially being fed by the fact that sellers often have their choice of multiple, above-asking-price offers.
“Would-be sellers know they would face fierce competition when looking for a home to buy,” wrote Lewis in an email. “Rather than subject themselves to a demoralizing home search, they stay put and keep their homes off the market – which exacerbates the problem of scant inventory.”
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at firstname.lastname@example.org.