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Buying Homes During Covid

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People Rushed to Buy Homes During COVID-19. Now, They Regret It.

The hot real-estate markets across the U.S. led to a number of buyers to purchase homes without performing due diligence

A cardinal rule of home buying is that you shouldn’t rush into a purchase of a home. But in 2020 and now in early 2021, millions of Americans did and are doing just that…rush into purchasing a home, occasionally sight unseen or without a thorough home inspection.

Fleeing small apartments, buying vacation homes or simply looking for a change of scenery amid the crushing boredom of lockdowns, people scrambled to buy houses amid the pandemic, spurring bidding wars and supercharging real-estate markets across the country, according to Candance Taylor*, reporter with the WSJ. Now, many are discovering the pitfalls of these hasty purchases, ranging from buyers’ remorse and financial strain to damage caused by unexpected problems.

At the same time, inventory dropped as many homeowners hesitated to list their properties in the pandemic.  The pandemic has aggravated the housing market’s longstanding lack of supply, creating a historic shortage of homes for sale. The shortage has pushed home prices higher, stretching the budgets of many middle-class and first-time home buyers. The median existing-home price crossed above $300,000 for the first time ever in July, up 8.5% from a year earlier, according to NAR.

The result is that much of the country saw a price spike and bidding wars, brokers said, leaving buyers with little to choose from. In these conditions, many are tempted to waive inspections or skip other due diligence they would normally perform before buying a home.

Over the past two years, the insurance company Chubb has seen large, non-weather-related losses increase in frequency and severity, according to Fran O’Brien, division president of Chubb North America Personal Risk Services. She attributed these losses in part to hasty home purchases: Buyers moving from a small city apartment to a large home in a rural area may not be well versed in how to prevent the pipes from freezing, for example.

“People are moving to places that they don’t know a lot about,” Ms. O’Brien said. “They’re thinking, ‘this looks like a nice place to live’ for amenities it may have. They don’t understand what risk there could be with that home.”

People are even more likely to overlook those risks, she said, when they are in a hurry to snap up a home before someone else does. “You run into this lack of awareness and lack of time, which is not a good combination.”

A HomeAdvisor report found that Americans did an average of 1.2 emergency home repairs in 2020, up from 0.4 in 2019, while emergency home spending jumped to an average of $1,640, up $124 from the 2019 average.

References:

  1. https://www.wsj.com/articles/these-people-rushed-to-buy-homes-during-covid-now-they-regret-it-11613062856
  2. https://www.wsj.com/articles/americans-want-homes-but-there-have-rarely-been-fewer-for-sale-11600680612?mod=article_inline

* Candace Taylor, Real Estate Reporter and Editor at The Wall Street Journal