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75% of people who bought a home during the pandemic have regrets: Here's why

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Key Points
  • The cost of rent is pushing more people into the competitive homebuying market, despite low inventory and high prices.
  • "There are going to be a million temptations to stretch beyond [your budget] because of limited inventory and competition," says Greg McBride, chief financial analyst at Bankrate, "But remember this: The novelty of that new home will wear off; the mortgage payments do not."

The housing market has been booming since the start of the pandemic: Persistently low inventory has meant many homes sell within days of being listed. Bidding wars are common, and the intense competition often pushes homes to sell above their listing price.

But once the dust settles, many people who've bought during the pandemic frenzy are beginning to regret certain aspects of the purchase.

Case in point: Zillow's new survey on buyer's remorse, which found 75% of recent homebuyers have at least some. Top regrets include the fact that their home needs more work or maintenance than buyers wanted and the fact that the purchased home feels too small.

Other surveys have come to similar conclusions. The real estate website Clever found that 72% of homeowners regret some aspect of their purchase, and 60% experienced some form of buyer's remorse. And a Bankrate survey from last summer found that two-thirds of millennial homebuyers had misgivings about their property.

Whether it's regretting spending too much or wishing they'd done more research, a lot of the common regrets are likely due, at least in part, to today's brutally competitive market, says Greg McBride, chief financial analyst at Bankate.

"I think there's a very legitimate concern about first time homebuyers feeling an urgency to buy," says McBride. "Not only have home prices and mortgage rates gone up, but now rents are going up by double-digit percentages in many markets."

'A lot of would-be homebuyers are feeling the heat'

Pricier homes and mortgages have put renters in a difficult spot, both literally and figuratively.

If they buy a place now, they'll likely face a lot of competition and historically high prices. In previous homebuying booms, the traditional advice might have been to rent until the market leveled out, while using that time to save for a down payment and strengthen your overall financial bona fides.

That advice is tougher to follow these days: Rising rents and ongoing inflation are making it harder to save, McBride says. Stuck between a rent hike from your landlord and buying a house in a tight market, it makes sense that some people might go with the latter.

"You don't want to jump from the frying pan to the fire, but I can understand how a lot of would-be homebuyers are feeling the heat," he says.

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Owning a home is a big responsibility, and as many recent buyers have experienced, rushing in can come with big regrets later on.

Some of the most commonly cited regrets among recent homebuyers in Clever's recent survey include 40% of people who say their new home requires too much maintenance, 30% who regret the hidden costs of homeownership, and 28% who now find their monthly mortgage payment too expensive.

'The novelty of that new home will wear off; the mortgage payments do not'

Going above budget to buy a home is a common mistake a lot of would-be buyers make when the market is hot, and that choice can be very costly, McBride says.

"There are going to be a million temptations to stretch beyond [your budget] because of limited inventory and competition," he says, "But remember this: The novelty of that new home will wear off; the mortgage payments do not."

The common wisdom says that you should follow the 28/36 rule when it comes to planning your monthly mortgage payment, which says you should spend no more than 28% of your monthly gross, or pre-tax, income go toward housing costs and no more than 36% go toward total debts (including a mortgage and other housing costs).

Using a housing budget calculator to estimate what that all in number should be is a good idea, McBride says.

To limit home buying regrets, be very involved in the process

In the current competitive market, some buyers might be tempted to skip a home inspection or even buy a property sight unseen in order to make their bids as attractive as possible. A lot of real estate agents will tell you either move is a big no-no. The extra savvy buyer should not only require a thorough inspection process, but also show up for their home inspections, says Robert Erickson, a real estate agent in Los Angeles.

"Agents can only convey so much and a report via email can only convey so much," Erickson says. "But if you are in the house and you can smell the mold, or you can see the water intrusion in the basement, it's going to give you a better idea of what work needs to be done."

That mindset is key to making sure you feel good about the purchase you're about to make, he says.

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Here are three more pieces of advice to keep top of mind as you shop, to limit the chance of buyers remorse:

  • Don't shorten the inspection window. This is the time when you "go kick the tires and open the hood," Erickson says, and you shouldn't skip it. A lot of inspection periods are set at 17 days, but some buyers shorten them to 10 or get rid of them altogether. That's a missed opportunity to know what you're getting into.
  • Pick an experienced, local agent who knows the neighborhood. Working with an experienced real estate agent can make a huge difference when you're house hunting in a competitive market, Erickson says. They'll not only help you figure out what you can afford and where you should look, but they will likely be better negotiators once you submit your offer.

    Some may even score you an off-market or pocket listing, which is a home that is for sale but isn't on multiple listing services (MLS): After dropping marketing material in a neighborhood, a "seller called me, and then I called the buyer and said this is off market. That's the power of being active in the community," Erickson says.
  • Get a quote for your mortgage rate in writing. Mortgage lending rates have jumped significantly in the last few weeks. "There's a calculation that for every point that [rates] go up, that is 10% less house [buyers] can afford," Erickson says.

    If you're serious about buying a house, get a quote from your lender in writing that promises to hold that rate for a set period of time. "If you don't lock in the rate, by the time you close, it might have adjusted higher," he says. But if you have it in writing, you can more easily negotiate the lower rate, or even shop it around with other lenders to make sure you're getting the best deal.

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