Chasing Illusions: Does The Home You Want To Buy Actually Exist?
Everyone has their own vision of their dream house. Today, with the proliferation of platforms like Zillow and homes.com, home buyers simply plug in their criteria – and PRESTO! A screen full of perfect matches appears! But what if that does not happen? What if you search for months and months and find NOTHING that fits your criteria. That glove-like fit you have been longing for never really happens. In the local market, does the home you want to buy actually exist?
These days inventories are at record lows in many areas. So finding the right home may indeed take more time than is typical. However, if you have been scouring the market for months with no success, this may go beyond an inventory issue.
Human resources often use the term “purple squirrel” to describe an imaginary “perfect” employee that doesn’t exist in the real world. You may have to own up to the fact that your dream house might be the housing equivalent of that “purple squirrel”. It simply does not exist, or if it does, it is well beyond your price range.
Buyers looking for purple squirrels in the housing market fall into two basic categories:
- They are searching for homes with a list of must-haves that are not compatible with each other.
- They are searching with a list of criteria is way beyond their price range.
In both cases, the endless search can lead to needless frustration. To break this pattern, home buyers have to recognize that continuing to bang their heads against the wall with the same list of must-haves is not going to solve anything. Reassessing needs and revising the list often frees buyers from the constraints which have been boxing them in.
If you have wondered, does the home you want to buy actually exist, below are numerous tips to get you back on track to finding the ideal property for your needs.
Home Buyers With Incompatible Criteria:
We all have our own vision of the perfect home. The trouble is that sometimes that vision does not really mix with the reality of the market. Sometimes, specific items on the list of must-haves conflict with each other. This can lead to a fruitless search for a forever home that really does not exist. Here are some typical examples:
A walkable neighborhood and a large yard…
I spoke with Ruthmarie Hicks, a top agent in White Plains NY, who said about a year ago she had a couple who were searching for their first home outside New York City. They knew exactly what they wanted. They wanted a home that was walkable to train and town with a large rolling lawn and minimum of 0.5 acres.
Extensive outdoor space was one of the main reasons they wanted to leave the city. There were other criteria as well which were reasonable, but these two must-haves were in direct conflict with one another.
Why is this a conflict?
At first blush, some might find it hard to see how these two criteria clash. But walkable neighborhoods only become that way if lot sizes remain relatively small. So these two must-haves were in direct conflict with one another. In this case the problem was solved by the client. Once they realized just how big 0.5 acres was, they were happier with a smaller lot!
A pre-war condo or cooperative with all the modern bells and whistles…
Another common example of incompatible criteria is in the condo and cooperative market. Older buildings, particularly those in walkable areas tend to have certain constraints. The main sticking points are an immediate parking spot for a car (or 2 cars!), central A/C, and laundry in the unit. At first blush, these things seem reasonable. They are generally must-haves in modern developments.
Why is this a conflict?
Prior to World War II, when most of our downtown areas were being developed, car ownership was a luxury. So the parking in these complexes is often shockingly limited. Developers never anticipated needing space for 1 car per family, let alone 2. This generally creates a wait list for onsite parking that can last for a few months to a couple of years. Street or municipal parking can be a drag, but depending on the location, it is usually more bearable than people think.
As to the other issues, the very concept of having a private washer/dryer for every occupant and central A/C came decades after these complexes were built. The result was that none of these buildings were constructed with the required plumbing or duct work to make these features a reality. Retrofitting an entire building to provide these systems is prohibitively expensive.
What to do when you have conflicting home buying criteria…
If you have been searching for a while, and find yourself batting your head against a wall, it is time to reassess your needs vs your wants. Your local real estate agent can help you understand what decisions you need to make, but he/she can not make those decisions for you. If you drill down to your must-have items, you will typically find what you are looking for when you start asking does the home you want to buy actually exist!
For example, if I have a client who wants to be able to walk to public transportation and also thinks a large yard is very important, I would suggest that they think through how much more commuting time will be involved if they are further from the bus/train and whether it is worth the extra time in transit. Different families will have different answers to that question. Your answers will be as unique as you are, which is as it should be.
Home buyers who price themselves out of the market:
Look, I get it. Everyone would love to have more home than they can possibly afford. I have yet to meet a buyer client who did not want “just a bit more” than they can afford. Wanting more than you can have is part of human nature.
Home buyers need to look at what they can afford today in the real world. If your price range is between $200,000-$250,000, then you should not set your criteria at the $400,000 level. Although compromise is hard, the good news is that once you have made some hard decisions, you can find a home that suits your needs and most of your wants.
Here are several typical ways that home buyers price themselves out of a market…
It’s that banner school system or bust…
Sometimes the issue is a simple as a zip code and a school district. I have seen this single issue bog more home buyers down than any other. My area of the country is blessed with decent schools. There are many fine school districts, but some parents are obsessed with getting their children into one particular school system.
When the median price for a home in that system is over $250K and the you have $200K to spend, there is a direct conflict. If your top price point is that far below the median home price, you are not going to find much of anything unless you want to do a complete gut renovation.
Champagne taste on a beer budget…
This is the second most common issue agents in our area run into. Back in the dark ages before the housing bubble, the standard wisdom was to buy the best location that you could comfortably afford and then fix up the house gradually. This is something that has been lost in a day when buyers want their homes turn-key.
The issue here is that many home buyers could afford the home they want in terms of location, square footage, number of bedrooms etc. The sacrifice would be mostly in accepting some dated finishes that could be upgraded later. But finding the same home in turn-key condition at their price point just is not going to happen, especially in a sellers market.
Wanting it all right now…
This is a variation on champagne tastes on a beer budget. The best analogy for this was a young buyer client that I had last year. She was looking to purchase her first condo. Her rent was choking her and her parents generously offered to give her the down payment for a small condo. The difficulty here was that my client immediately objected to the small size and the fact that she could only afford a one bedroom place. “What happens if I get married and start a family?”
This is a perfect case of anticipating needs way too far down the road. This young lady was not even engaged, let alone having a baby. The condo she could have bought could have helped her build the equity she needed for that next step down the road. Instead of working with what she could afford now, she priced herself out of the market by wanting a $250k condo on a $150k housing budget.
What to do if your wish list prices you out…
Should you wait or should you buy?
This is the first question you need to ask yourself. A great deal depends on how big a leap it will be price-wise from what you can afford now. Is it a matter of saving an additional $5-$10k for that down payment? That might be a good reason to just wait a bit provided you can save that sum in fairly short order.
But remember that most of the country is in an appreciating market. If prices rise 5% over the year it takes you to save that money, the goalposts have moved. You now have to save $7.5-$15k and apply for a higher mortgage as well. If you have to wait two years, you are looking at $10k-$20k more.
If you have a budget of $200k and the home you want is $400k, you really have to rethink your criteria and make some hard choices. Saving your way into a home that is double your current budget just is not going to happen unless you are expecting a windfall.
Taking baby steps to your dream home…
Starter homes have been a dirty word with millennial home buyers, but that is exactly what most of them need in order to leverage their way into a larger home. When they start paying off the loan and installing upgrades, the home appreciates in value and gives them the money they need to move up.
Buyers who insist on an all or nothing scenario are generally shooting themselves in the foot. As markets appreciate, these potential buyers often find that their money buys less and less. Buy what you can afford and sell when you have the resources to comfortably step-up to the next level.
Take a long hard look at needs vs wants…
Most buyers in the position of being priced out need to make a list of what they want and figure out what they will truly need in the next five years or so.
- It would be nice to have that extra bedroom, but do you really need it?
- It is nice to have laundry in your unit, but would using a common well-kept laundry in the building really be the end of the world?
- A house with 5 bedrooms and a spa-like master suite sounds great, but will you ever be able to afford that without first building equity in a starter home?
- Would a starter home with expansion potential be an option for you?
There are many fine school systems…
This issue is a topic unto itself. Without delving into areas where steering laws will not let me venture, I will say this: The school systems arms race is extremely overrated.
People in our area are more than a bit spoiled. The situation has left some home buyers fighting over that tiny sliver of school systems that are in the top 1-5%. If you can afford a home in these school districts, fine. If you can not, it does not have to price you out of the market.
Home buyers who are priced out of the school system they want, need to do their homework – no pun intended. A school is much more than its raw test scores. A little digging will often tease out school districts with strong academic standards and a nice array of extracurricular activities and AP classes. Lower test scores are often associated with a more diverse population and not substandard teaching or low academic rigor.
The Bottom Line for Home Buyers:
It is a strange irony that the very thing we have to compromise on the most is the single biggest purchase we will ever make. The one purchase where we truly want everything to be “perfect” is going to be filled with compromises. Nevertheless, this is a normal part of the process. And yes, it is perfectly natural to feel a certain disappointment. But here is the final question that I will leave all frustrated home buyers with:
Is your disappointment at having to cut back on your wish list a good enough reason to:
- Keep paying your landlord’s mortgage instead of building equity of your own?
- Stop you from moving on with your life, whatever phase you are in?
For the most part, the answer to each of these questions is usually “no”. It is time to start building equity in your own home instead of helping someone create it in theirs! And the ultimate answer is “yes” to the question, does the home you want to buy actually exist.
Additional Buyer Resources
Kevin Vitali: How Homebuyers Find Homes
Conor MacEvilly: Fully Informed or Day Dreaming Buyers
Paul Sian: Where Can Buyers Find Homes For Sale?
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