Buyers Who Can't Afford Big Down Payments Elbowed Out of Hot Markets
New York, NY, June 21, 2021-"In the turbocharged housing market, prices are surging and homes on the market are routinely selling for far more than the listing price. Those who can’t afford big down payments are often the ones losing out,” reports the Wall Street Journal.
“Half of existing-home buyers in April who used mortgages put at least 20% down, according to a National Association of Realtors survey. In 10 years of record-keeping, that percentage has hit or exceeded 50% three times, and all have been since last fall. A quarter of existing-home buyers in April paid cash, the highest level since 2017, NAR said.
“Oscar Reyes Santana has been house hunting with his parents and siblings for more than a year in California’s San Fernando Valley. They are all first-time buyers and budgeted for a 5% down payment.
“The family bid on at least five homes, each time offering at least $30,000 above the asking price, but they lost out every time, said Mr. Reyes Santana, who is 23.
“‘It’s been really tough to try to beat everyone else,’ he said.
“They have all but given up the search for now, and are focused on saving up for a bigger down payment.
“Home prices are surging. The median existing-home price rose 19% from a year earlier to $341,600 in April, a record high, according to NAR. That is largely because there aren’t enough homes on the market to meet demand.
“In such a housing market, sellers can often choose among multiple offers. Cash buyers have an advantage because they don’t need to secure mortgages, which can make the transaction go faster. Sellers sometimes worry that offers with smaller down payments are likelier to fall through during the loan-closing process, agents say.”