If you’re currently in the market for a new home, you will find that the market is very tight. Bidding wars are back, and with it, the heartbreak of not getting the home you want. Why is that? Here are two reasons.
1. Current Mortgage Rates
Many would-be sellers are unable to list their homes because they can’t afford the price of a new one at the current mortgage rates. As a result, a lot of homeowners who would prefer to downsize, or graduate out of a starter home, or simply move to a new location, are waiting it out. That keeps those homes out of the inventory pool
A lack of housing options creates a very competitive market, in which many buyers must compete for few available properties. This often results in bidding wars and drives up home prices. It can also leave buyers with little power and fewer protections in the transaction, as sellers have their choice of other hopefuls who might be willing to waive contingencies and accept any terms the seller wants.
“I was told that my offer was very good – I was prequalified and went over the asking price. There were three other contracts and then someone swooped in with a cash offer. As a first-time homebuyer, I couldn’t compete with that. It is disheartening.” - First-time Homebuyer
2. Investors Are Scooping Up Houses
A couple of years ago, Attom Data Solutions ranked Baltimore as the 4th best market for the growth in single-family rental yield. Today, Baltimore is still listed as one of the best places to buy rental property for cash flow and appreciation.
Wholesalers play a key role in helping investors buy homes in Baltimore through off-market deals. They find homeowners, offer them cash for their houses, and then find investors who buy the homes at higher prices.
It’s an unregulated industry that anyone can try. Some officials want wholesalers to be licensed, like real estate agents. That would require a change in state law.
About the data*
The Baltimore Sun reviewed residential sales between parties at arm’s length for improved properties, meaning sales of detached houses, rowhouses and condos that were bought and sold by parties with no shared financial interest.
The Sun identified investors by searching the data for terms such as “LLC” and “corporation.” Sorting this data showed that home sales to investors in Baltimore has increased compared to home sales to individuals.”**
If you are a first-time homebuyer, Whit Harvey is the right agent for you. He will help you navigate the process and ensure that you provide your best contract.
*Baltimore Sun data journalist Steve Earley contributed to this article.
** Excerpted from Baltimore Sun Article Outside investors are buying up homes in Baltimore’s low-income and Black neighborhoods