The experience of home buyers during the red-hot real estate market of the COVID-19 pandemic has been a punch in the gut, to say the least.
Many young first-time home buyers, Millennials who were given few options to choose from, now have misgivings about certain aspects of the properties they purchased under frantic circumstances.
Zillow’s latest survey on buyer’s remorse found that three-quarters of recent home buyers have some regrets about the decisions they made.
The nationally representative survey included responses from more than 2,000 people who either purchased a home in the last two years or who intend to buy a home in the next 12 months.
The top regret cited in the survey was the discovery that homes needed more work or maintenance than expected, followed by the feeling that the properties buyers purchased were too small. About a third of respondents felt this way about the homes they bought.
“The pandemic-driven feeding frenzy in the for-sale market added challenges for buyers, especially those purchasing for the first time,” said Zillow population scientist Manny Garcia. “This research suggests many of those buyers ended up in a home that was less than ideal. It’s important to remember that even in a balanced market, most buyers have to make compromises to stay within their budget. However, to minimize regret, aspiring buyers would be wise to establish where they’re willing to compromise and what’s a deal breaker before shopping.”
About 74% of buyers said they wish they had done at least one thing differently during the shopping process, including 38% who regret not having spent more time searching for a home or weighing different options. Approximately 28% said they would have shopped for and purchased a home in a different area than where they bought.
One Zillow’s key takeaways of the survey is that first-time home buyers may have a tendency to be wooed by a well-staged home and lose sight of the core objectives, such as finding the right layout and choosing the right location.
Other survey takers regretted not anticipating the hidden costs of homeownership, or even felt surprised by the high cost of their monthly mortgage payments.
In some ways, such high rates of buyer’s remorse are hardly a surprise in a market characterized by price inflation, extreme bidding and shrinking supply. It may not be fair to call many of these buyers prisoners of their own panic, especially if they have growing families and felt compelled to make a move.
The honesty shown in the survey is a sign that the “perfect” home is always elusive and it’s common to nitpick decisions or question the price tag.
What would be interesting to see is how much regret correlates with the riskiest buyer behavior, such as waiving contingencies or bidding far above asking price. These are the kinds of rash decisions that can lead to suboptimal outcomes, even if the choice seemed necessary or came after months of trying and failing to buy a home. The results of the Zillow survey are a valuable reminder for buyers entering the spring market to make sure their priorities and their processes are well-defined. This could go a long way to ensuring that the decision to buy or wait is made for the right reasons.
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