The good news for homebuyers is mortgage interest rates are up.
It may seem counterintuitive, but while homebuyers are looking at paying more for their loans, rate increases have created much-needed wins for buyers in a couple of other columns.
Competition and bidding wars among buyers are slowing, as more shy away from the higher rates. That’s forcing sellers to lower asking prices, and in some cases even helping buyers with some closing costs. Builders suddenly find themselves hungry again, and home inventory overall is slowly climbing. Homes are sitting a bit longer on the market, giving buyers more time to shop and to consider their purchase.
That said, it’s still a seller’s market and inventory is historically too low for it to be considered balanced. That means home choices are going to be fewer for buyers — at least for a while. Except for cash buyers and the lucky few borrowers in the right place at the right time, willingness to compromise is going to be important.
Tampa Bay Times’ Best of the Best Gold winning Realtor Jennifer Dobbs of Mihara & Associates is a glass-half-full kind of real estate agent. She said don’t think about settling for something other than what originally was desired as a compromise, but rather, be flexible. It’s a superpower of sorts buyers can leverage to make the dream of homeownership a reality in a market that still favors sellers.
Dobbs said a couple of buyers she put into a new home recently are a good example. Sergio and Robin Garcia wanted a single-family home in a top school district. After looking at several pre-owned homes with no luck, they stepped out of the box and employed the power of flexibility.
“It worked out perfectly for them,” said Dobbs.
The couple ended up buying a lot in Cypress Preserve in Land O’Lakes, and moved into their spanking new, large 3/2/2 villa earlier this year. They saved more than $100,000, got a new-home warranty and builder incentives, and to top it off, the school district met their criteria.
Had the couple been unwilling to consider alternatives, they very well might still be home shopping today.
Dobbs notes there is a trend among buyers the last few years to buy townhomes and villas when they originally set out for a single-family home. A few reasons are builders have begun upsizing the square footage, adding third bedrooms (and sometimes a bonus room or office), as well as two-car garages.
Dobbs said the building of townhomes around Tampa Bay has exploded in the last few years, along with communities featuring larger villas like the one the Garcias bought. In years past, families with children would have passed, but with more floor space and the needed bedrooms and both family cars, they now are a viable option. They typically cost less than a single-family home, though buyers should consider homeowners association or other fees. Typically, such fees are part of the deal, though the upside can be that things like lawn care, exterior painting and re-roofing are covered under those fees.
“The market is definitely shifting (toward buyers) but we’re not there yet,” said June Connell, a luxury specialist who heads the Junebug Home Team at Compass Real Estate. That means a willingness to be flexible is a plus for buyers.
“Maybe they didn’t want a two-story house; maybe they wanted another bedroom or an office, but they accept a bonus room they can convert,” Connell said. “They have kids and wanted three bathrooms, but they settle for two-and-a-half.”
Those kinds of compromises are how deals get done, she said, adding that it often boils down to vision. She encourages buyers to look at alternatives that don’t check all their boxes. She said it is not uncommon for a buyer looking for a single-family home to change their mind when they look at a townhome.
“What happens is once they are inside and see it, they can imagine how it can work for them,” she said. “They think about how nice it would be not having to worry about maintenance as much.”
But it’s not all about the home. Flexibility of geography can be a plus in today’s market, and it can come with the added advantage of a lower price, Dobbs and Connell agree.
Dobbs said the general rule of more bang for the buck the farther north buyers shop still applies. She’s seen many priced out of Hillsborough and Pinellas counties end up in Pasco or Hernando counties, often saving on a good deal.
Connell said buyers who were looking at spending $800,000 for a home in Hillsborough or Pinellas might find a comparable home in southern Pasco for $600,000. The compromise might be longer drives to work, shopping, entertainment or recreation areas and beaches.
For those who must have downtown districts within walking or biking distance, moving too far away is not an option, noted Dobbs, but there are other compromises that can work.
Someone who wants to be near Riverwalk in Tampa might settle for a single-bedroom bungalow rather than the two bedrooms they had hoped for, she said. Dobbs has a friend who wanted to be within walking distance of downtown Tampa’s attractive districts but ended up on the other side of the bay near downtown St. Pete’s galleries, cafes, boutiques and restaurants.
Another area where some have little room for compromise is schools. Dobbs and Connell concur that less desirable school districts often are deal breakers for parents looking for a single-family home near top-rated schools.
If those homes are outside of their budget, it’s one of the situations where a less expensive family-sized townhome might be the solution. Financial flexibility and getting creative with financing and family expenses might also be the solution, said Connell.
Another strategy that involves strategic compromise might be looking at a home purchase as a temporary (or long-term) investment, said Dobbs. Rent is very high around Tampa Bay these days, so buying to acquire some equity is preferable to many.
Instead of a forever home, a buyer could buy a townhome, live in it as they shop for their larger dream home, then sell or rent it until they return to it as their downsized retirement home.
The bottom line is not everyone has the resources to get all they want in a home, and for those folks taking a page from the playbook of the U.S. Marines — made famous by actor Clint Eastwood in the movie Heartbreak Ridge — may be wise. While things are looking up for buyers, we’re a way off from buyer/seller equilibrium in the market, so listen to Clint: “Improvise, adapt and overcome.”
Times Total Media is the sales and marketing division of the Tampa Bay Times. Contact firstname.lastname@example.org with questions.