Frustrated by the Home-Buying Process? You're Not Alone

This article is provided for informational purposes only and should not be construed as legal or investment advice. Always consult with a professional financial or investment advisor before making investment decisions.

Getting ready to buy a new home can be exciting. But it can also be a frustrating process, particularly in a hot real estate market. 

If you’re feeling frustrated, know that you’re not alone. Many buyers are fed up with the homebuying process. To illustrate, let’s explore some of what other homebuyers are experiencing in today’s market. 

The problems homebuyers are facing

In a tight market, buying a home can be even more stressful than usual. If you talk to homebuyers today, or read real estate news, it’s easy to see that buyers are stressed out and frustrated. Here are just a few of the many problems that people are facing in today’s market.

Bidding wars 

Many buyers are facing bidding wars when they place an offer on a home. This occurs when multiple buyers make competing offers on the same property, and are each forced to offer more and more to outbid the other buyers. 

In some cases, buyers are bidding over asking and not even hearing back. “We did $35,000 over asking and they ghosted us. No repairs. As is. They just never answered us.” said Rob Ettaro, a would-be homebuyer in Salt Lake City, in a New York Times article. 

Fortunately, bidding wars are easing slightly. In May 2022, around 60.8% of home listings resulted in a bidding war — down from a high of 71.8% a year prior. 

Low inventory

Buyers are also facing limited choices when it comes to the properties available to them. Active inventory was down 28% from a year ago, as of January 2022.

With fewer houses on the market, buyers face limited options and intense competition. Many buyers are being forced to make compromises on what they really want. 

“We found a place that's smaller than we want, but it'll work until we have something built or until the market cools off,” said Shannon Kaufman, in an interview by CBS's Moneywatch. Others are choosing to rent homes until more units come up for sale.

Rising interest rates

Interest rates are increasing rapidly, having already more than doubled since early 2021. The increase in mortgage rates is driven by the Federal Reserve raising benchmark interest rates in an effort to fight inflation, among other factors. 

When interest rates rise, the cost of borrowing money increases substantially. These examples illustrate the concept simply:

• A $400,000 mortgage at 3% interest would have a monthly payment of around $1,967.

• A $400,000 mortgage at 6% interest would have a monthly payment of around $2,681.

That’s a difference of $714 — or 36% more — for the same mortgage amount. Given that home prices have surged, this additional interest cost places a large burden on would-be homebuyers. 

High prices

To cap it all off, the housing market is as hot as ever, with prices higher than ever. Nationwide, home prices surged 17% in the 2021 calendar year, and have continued to increase throughout early 2022.

For context, a home that cost $400,000 at the end of 2020 would have cost $468,000 just a year later — and likely even more today.  

How are homebuyers coping with these challenges?

Facing an increasingly challenging market to navigate, how are buyers coping these days? Here are some strategies that buyers are using, and that you can consider if you’re in a similar situation. 

Renting

Many buyers are dropping out of the market, committing to renting until things cool off. 

"We decided to rent while we wait for the housing market to settle or resolve itself," said Steven Andranigian, a Southern California resident, when interviewed by a local ABC affiliate. 

While there are certainly benefits to owning a home, there are also benefits to renting that are often overlooked. Renting for a year or two could also give you time to get your finances in order, so you are better prepared for buying in the future. 

Improving finances

Some buyers are opting to focus on improving their financial situation while they wait for the housing market to stabilize.

In many cases, this means paying off debt. Reducing debt load can lower your monthly expenses and can also improve your credit — potentially resulting in better mortgage rates in the future. 

If credit card debt is holding you back from your goals, check out Tally† , an app that may help qualifying Americans consolidate credit card debt to a lower interest rate. Learn how Tally works. 

Continuing the search

Many buyers are dedicated to finding the right home, and are continuing to make offers. And fortunately, there are some signs that the market may be shifting in buyers’ favor. 

Although the process can be frustrating, if owning a home is your dream, it’s worthwhile to stick with it. 

Increasing down payment savings

While they wait for the right home to pop up, many buyers are saving up more for their down payment. By having a larger down payment, buyers can reduce their borrowing costs — or opt to afford a larger mortgage. 

Others are looking into assistance programs, like first-time homebuyer programs. These state-level programs help buyers with their down payments.  

Broadening the house search

Other buyers are broadening their horizons when it comes to what they are looking for. Some are looking for fixer-uppers that they can renovate to suit their needs. Some may be considering smaller homes that are more affordable. And others are expanding geographically, looking at nearby towns that are within commuting distance to their work. 

Working with multiple realtors

Some buyers are even opting to enlist the help of multiple realtors. This often makes the most sense for buyers who are searching and/or homebuying in multiple towns. 

It’s generally acceptable to work with multiple realtors at once — just be sure that you haven’t signed any exclusive agreements with them.  

Wrapping up

The answer to “how long does it take to buy a home” has many varying factors. It’s a seller’s market at the moment, which can make it difficult for buyers to find what they’re looking for. But with a little patience and persistence, buyers can find the home they want. 

Want to improve your finances while you’re searching for your next home? Check out the rest of the Tally blog, where we discuss credit, debt, investing and more. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.