Nearly Three Out Of Four Pandemic-Era Homebuyers Have Doubts About Their Purchases

Hundreds of thousands of Americans braved the COVID-19 pandemic and purchased homes when the virus was wreaking havoc on American cities in 2021 and 2022. The American Home Buyer Survey by AnytimeEstimate, an online service that assists buyers with real-time estimates on real estate transactions, found that 72% of those buyers have second thoughts about their purchases.

An Overwhelming Number Of First-Time Buyers

Despite the chaos the pandemic caused, there was a miniature real estate boom that accompanied it. According to the American Homebuyer Report, 70% of the homebuyers between 2021 and 2022 were first-time buyers. This may be one factor playing into some of the unease many of them have expressed about their purchase.

One-third of new homebuyers reported that the process of executing their real estate transaction was more difficult than they expected it to be. Some of the dissatisfaction can certainly be attributed to that. Buying a home is a difficult process, even under the best circumstances. It's the buyers who are the ones hurrying around making offers and counteroffers, then waiting for appraisals and loan approvals.

That process of offers and counteroffers also gets to the root of another issue many pandemic-era homebuyers report having with their purchase: 1 in 3 buyers surveyed (both first-time and experienced homebuyers) felt like they paid too much for their home. Some of that has to do with the market where buyers made their purchases. If it was overheated when they bought, they likely paid more than they wanted to get a deal done.  

Paying Too Much And Compromising

Nearly one-third of the surveyed home buyers reported having to make more than one offer, and 41% of buyers made five or more offers. Thirty-six percent of buyers made offers on properties sight unseen and one-third of buyers reported paying over the asking price to get their deal done. The average amount over the asking price in those deals was $65,000. All of that is indicative of an overheated, seller-friendly market.

Buyers don't just pay too much in overheated real estate markets. Competition between multiple buyers for limited inventory drives up prices and forces many buyers to make difficult choices in terms of what their "ideal house" is and the house they end up buying. A full 80% of the buyers surveyed reported having to compromise on their priorities to get a deal done.

For half the buyers surveyed, purchasing a home in a good neighborhood was their No. 1 priority. With that said, a host of other priorities, such as square footage, distance to work or family and access to public services can find themselves on a buyer's proverbial chopping block if they feel like they "have to do a deal now or never" because they are buying in a super-hot market that shows no signs of cooling.  

Long-Term Perspective May Change For These Buyers

Thirty years, the length of most residential mortgages in America, is a long time. The homebuyer report was issued in late 2022, a time when many of the buyers surveyed were decompressing from making their first home purchase. They were also looking at mortgage statements reminding them how many hundreds of thousands of dollars they still owed their mortgage lender.

In the few years since the survey was released, interest rates have hit peaks not seen since the early 1990s. The prices are still high, and buyers are still making compromises. Considering the extent to which high interest rates have diluted their buying power, today's buyers are probably making more compromises than they would have a few years ago.

In 15 or 20 years, after these homes have appreciated (hopefully) and the owners have built up a solid base of equity, they may feel different about their purchases. Many of them will likely feel like the deal they "rushed into" 15 or 20 years ago was the best decision they ever made.

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