With millions of Americans relocating and homes selling like hotcakes, it's no wonder younger buyers want to act quickly to stay competitive in a crowded market. But for some millennials, a home purchase has come with regrets.
Nearly two-thirds, 64%, of recent millennial homebuyers (ages 25 to 40) had regrets about their purchase, according to a recent Bankrate/YouGov poll. By comparison, just 33% of baby boomers, ages 57 to 75, were having second thoughts.
The poll defined "regrets" in two categories: financial (cost of the home and its upkeep) and physical (size and location). The biggest financial misgiving among millennials was not preparing for pricey maintenance costs. About 1 in 5, 21%, of millennial respondents said the cost of upkeep and repairs on their home was more than they wanted to pay.
Meanwhile, the top physical regret was size. About 30% of millennials were unhappy with their square footage: They felt their home was either too big or too small. Location was a regret for 15% of millennial buyers, too.
The white-hot housing market, where homes are being snapped up within hours or days, is likely contributing to these second thoughts.
"Because the market is so competitive, you have less time to make a decision on a homebuying purchase than you do on a laptop at Best Buy," Angelica Olmsted, an agent with RE/MAX Professionals Cherry Creek in Denver, told Bankrate. "You've already had, possibly, a couple of offers not accepted, you feel that pressure to make a decision and put an offer in."
With stiff competition, more buyers than ever are making offers sight unseen and waiving inspection contingencies to close the deal. So it's not surprising that so many of the big regrets are related to upkeep and feel.
Of Americans who bought a home last year, a striking 63% placed their offer without an in-person visit, according to Redfin. That's up from 32% in 2019. The jump is undoubtedly due in part to pandemic restrictions on in-person viewings, but eager or anxious buyers can also play a role.
You might win a bid faster by buying sight unseen, but "it's in the buyer's best interest to see the home," Francesca Ortegren, a data scientist at Clever, recently told Grow. Issues that can add to the home's overall cost "likely aren't highlighted in a virtual tour or in photos."
"People can tell a lot about whether they'd be comfortable in a home by stepping inside," Ortegren told Grow. "[The] flow and the size of the rooms can feel completely different in person."
Video by Richard Washington
Skipping out on an inspection is not usually a good idea, either, especially if you haven't seen the home in person. An expert examination could flag potentially expensive issues and allow you to back out of the deal if you must.
Homes are getting more expensive, too. The median sale price for single-family existing homes hit a record $329,100 in March, NAR data shows — 17% higher than the same time last year. Even with the current rock-bottom mortgage rates, a higher price tag can add up to a bigger monthly payment, so pay attention to the details. Over 1 in 9 of the millennials polled by Bankrate said their mortgage rate was too high, while 13% said they overpaid for their home.
With the pandemic pushing people to move, "sometimes homeowners are thrown into a situation where they become overleveraged," or borrow more than can afford to pay back, says Jason Gelios, a Realtor at Community Choice Realty in Michigan. "I always advise that [buyers] do not overextend on a home, [and] that they make sure that the home they choose is within their budget and comfort zone, so that they don't become house-poor."
Video by Jason Armesto
Having a "good" credit score of 760 or greater gives you the best chance of getting a good mortgage rate. If you haven't reached that level, don't be deterred: Some loans accept lower scores, and you can work with your lender to find the best match. Make a budget early on and stick to a monthly payment you know you can afford.
Buying a new home can seem overwhelming, especially while the market is hot. That's why it's important to take your time and consider all the options and outcomes before making a final call.
Working with a real estate agent can help ease the burden. Be clear about your budget, and go into the process knowing your must-haves and the aspects you're willing to concede on.
"Having an agent who understands your wants and can push back when you need that is so important," Olmsted told Bankrate. And when you do ultimately buy, it can also give you peace of mind that you made the right call.
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