It’s not only first-time home buyers who are taken aback by the country’s high housing prices. Folks who sold their homes and are trying to buy one now are also feeling stuck.
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A lot of people have realized it’s getting harder to buy a home – not just first-time buyers, either. Some people who did own a home and then sold it find it tough to buy another. NPR’s Laurel Wamsley brings us one story of home-selling regrets.
LAUREL WAMSLEY, BYLINE: It can be hard to get a foothold in today’s housing market, even if you’ve been a homeowner before. Take Bob Nicholson. He’s 58. And until last June, he was the owner of a town home in Burke, Virginia, a moderately expensive suburb of Washington, D.C.
BOB NICHOLSON: It was an end unit that had a large backyard, fireplace, in a nice community here in Burke.
WAMSLEY: Then his wife got a job posting in Australia. And it sounded like a fun adventure for the pair, who had recently married. So Nicholson decided to sell his house, before they moved abroad for a couple years. He’d put a lot of work into the home and made some good money when he sold it.
NICHOLSON: I thought about renting the place while I was gone, and just wasn’t comfortable with the notion of being a landlord from the other side of the world. In retrospect, I know that that was a big mistake.
WAMSLEY: A mistake because Nicholson wasn’t able to get an IT job in Australia. So they returned to Virginia after a year abroad, and he’s now starting again at his old job. But his old house? There’s no getting that back. Now they’re renting while they shop for a single-family home, and they’re having sticker shock. Prices are up 15% in Burke over just the last year, according to Redfin data.
NICHOLSON: I’m very frustrated. The real estate market is, in my opinion, far too hot and just continues to get worse. We’re looking around $650,000-700,000, and that’s not where we want to be. We were looking for something around $550,000-600,000.
WAMSLEY: One of the big factors slowing the housing market in the last couple years has been that most homeowners are doing the opposite of what Nicholson did. They’re holding on to their homes even if they aren’t a good fit anymore, due to the exceptionally low mortgage rates they were able to lock in a few years ago. Still, some people need to sell their homes as their lives change – to take a new job or fit a larger or a smaller household. But Nicholson certainly regrets selling that nice townhouse of his. And as he tries to find a new home that’s affordable, experts warn that prices might stay high.
LU LIU: There’s no kind of physical law of gravity that requires them to come down.
WAMSLEY: That’s Lu Liu, assistant professor of finance at Penn’s Wharton School. She says what does lower prices is more supply. The U.S. is millions of housing units short, but in many parts of the country, it’s hard and expensive to build much new housing. That shortage keeps prices elevated. Indeed, Nicholson gets frequent reminders that his former home is growing in value.
NICHOLSON: I get emails from Redfin on a regular basis telling me that my home is now worth $44,000 more than it was last sold for. So that doesn’t hurt at all.
WAMSLEY: Actually, it’s torture, but he hasn’t hit unsubscribe yet. Nicholson says he feels a lot of uncertainty right now as a homebuyer. There’s the election and how that might affect financial markets. There’s mortgage rates that came down, then started going up again. Still, Nicholson knows that he and his wife are comparatively lucky. He feels bad for the first-time buyers trying to break into the market now.
NICHOLSON: I can only imagine for them, it’s even more intimidating. And I think it adds to the overall concern that people have about our general economic conditions. My wife and I both make good money, but we’re having a hard time buying a home.
WAMSLEY: It’s an experience, he says, that’s very disconcerting. Laurel Wamsley, NPR News.
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