U.S. Real Estate Prices Are Soaring and Buyers Are Scrambling

In the midst of the pandemic, homes have been selling fast, leaving buyers to make snap decisions. If they wait too long, they’ll be outbid. If they don’t take their time, they might get a bad deal.

Despite the risk, homebuyers are signing contracts in record time, with some homes going under contract in just a few weeks. Buyers don’t seem to care that prices are skyrocketing. For instance, the median home price in Atlanta has risen to $349,000 – a 40% rise over the last two years.

Even with rising prices, homes in every major city are selling fast. Many are being bought at premium prices of tens of thousands of dollars over asking. The supply can’t keep up with the demand.


First-time buyers are at a disadvantage

In the current market, first-time buyers have a serious disadvantage. The biggest issue is they have to come up with the down payment without relying on the sale of a previous home.

The worst obstacle for first-time buyers is a lack of experience. In a fierce bidding war, a first-time buyer won’t have much time to think and may not have time to go through all the proper inspections. First-time buyers need to act fast to close the deal, and their inexperience could cost them later in repairs.


Experienced investors have the advantage

For investors with access to the Multiple Listing Service (MLS), the current housing market is a great opportunity to acquire more properties. Having access to the MLS makes it easy to spot opportunities before most people become aware of them.

To access the MLS, investors need a real estate license. In Georgia, it’s easy to get one. Investors can get a Georgia real estate license online by completing a 75-hour course to prepare for the state licensing exam.

When experienced investors see properties with potential, they’ll have the first opportunity to bid. Some are making offers above asking price to guarantee the property gets taken off the market.


Large firms are capitalizing on the housing market

Large firms with endless capital are also taking advantage of the market. They don’t mind paying a premium for the right properties. The opportunity to acquire a large number of properties may not pop up again.

Invitation Homes, a spinoff of Blackstone, owns 12,556 houses in Atlanta, Georgia. This company can get loans for less than the 2-4% interest rates home buyers get. Since the company can get billion-dollar loans at lower interest rates, they can afford to pay a premium to acquire certain properties. It’s no big deal to pay an extra $10,000 for a home when your interest rate is below 2%.

It’s the perfect investment acquisition strategy, but it’s not available to regular home buyers. That’s why large companies have the biggest advantage in this market, even more than individual investors.


Why are homeowners selling?

Homeowners are selling for a variety of reasons. Some people are downsizing, but many can’t afford to keep paying their mortgage.

The coronavirus pandemic has impacted the economy to the point where many people can’t find work, businesses have closed, and people need to eliminate their expenses just to survive. For some, selling their home is better than getting further into debt and going into foreclosure.


Buyers have to jump at every opportunity

Homebuyers who are just looking for a place to live have to jump at every opportunity they find. If they see something interesting and wait a week, the home they were considering will probably be gone.

The downside for buyers is not being able to take their time and find the right home. Most buyers have an idea of how they’d like their home to look, the kind of layout they prefer, along with other details. In the current market, buyers have to put their preferences aside and buy what they can afford when they have the chance. If they hold out for a better property, they might be out of luck.


Mortgage rates could rise soon and end the housing frenzy

News outlets have reported that the Federal Reserve has plans to slow monthly bond purchases and end them completely in the middle of 2022. This would increase mortgage rates, which would ultimately slow and stop the current home-buying frenzy.

That’s bad news for investors, but good news for first-time buyers who just want to find their perfect home.

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