It was only last August when WBUR published this story about home-buying. I critiqued it here. In short, the story encouraged buyers to do five things (in bold). A summary of my critiques is in italics after the “advice”:
- Prepare To Waive Contingencies. No, no. no, no, never.
- Check The Basement! Seller says you have 15 minutes, good luck! Since you are waiving home inspection, expect not to see everything you need to see.
- Settle For Less? There is truth in the law of supply and demand. Yes, that is stacked against buyers right now. Enter the market well informed about what the market is bearing. Be represented by an agent who will provide a comparative market study that will show you what a house should sell for.
- Find The Right Agent The advice is to hire an agent who knows the market. That’s a no-brainer. Does your agent focus on getting the best property for the lowest price? Does your agent have a supervisor who specializes in getting buyers the best property at the lowest price? Or, does your agent also work for sellers who ask for hurry-up sales and that buyers forfeit their rights?
- Don’t Fall For FOMO (Fear of Missing Out). I will agree with WBUR on this one.
Less than eight months later, this story was posted, nationally, by NPR. In it, we hear:
1. The woes of buyers who waived home inspection.
2. Woes of potential buyers and potential renters:
- The housing price inflation in home sales due to the uneven supply and demand.
- The rental housing inflation due to uneven supply and demand.
3. The cost of home ownership that new owners were not prepared for.
4. The staggering inequality in regard to home ownership in America. “According to a [NCRC] report released this month, homeownership among Black people in the U.S. hovers between 42% and 45%, while more than 70% of white people own their homes.”
My responses, this time.
- What did you expect, NPR? You were part of the barking crowd telling people to waive their home inspections. Telling them to look in the basement instead.
4 Buyers Real Estate buyer’s agents spend a lot of time in basements. We have the experience of following inspectors to hundreds of inspections. Even with that experience, we are able to say “That doesn’t look right,” but we depend on inspectors to confirm, “Yes, that is wrong.” How can you expect a new buyer, with maybe a little family experience in basements. to know whether they are buying a house or a money pit?
- The balance of supply and demand is stacked against buyers and renters right now.
That housing shortage is one of the things that trickles down. Prime rental prices are going up. Some of these renters will find owning more affordable. Some will pay more and find housing that is more comfortable. Most will pay more for their rental or downgrade into moderate rental properties. The price of the moderate properties then goes up, due to increased demand. Then moderate-income people either pay more for their rentals or move to less desirable rentals. Rents go up, down the quality line, until it forces people into the streets.
(Side note: The example this story gave about the people from San Francisco who couldn’t afford their rental seemed to me out of sync with the article. One partner was unemployed; this was not the time they would be purchasing a house.)
- Purchasers were never told about the 1% rule. Real estate agents who have an interest in selling real estate – as opposed to exclusive buyer’s agents who do not represent people who are selling – are more likely to follow WBUR’s advice to tell buyers to waive their inspection and mortgage contingencies. They also, I suspect, minimize the common wisdom that advises homeowners that their house will cost about one percent of its value in regular maintenance. Everything in a house has an economic life: the roof, the boiler or furnace, the paint or siding… A professional buyer’s agent prepares their buyer clients for this inevitability. Here’s our summary. More detail happens while our clients house hunt.
- Racial inequality in housing. I don’t know why that was tacked onto this particular story, but since it is here. Yes! Rental price gouging is forcing downward pressure that forces all renters to pay more to get more (and buy), or pay more just to stay the same, or pay less to get less. This is a problem that affects everyone. But, disproportionately, it hurts minorities and lower income people, who still have fewer options that more affluent white people.
To understand the structural racism barriers to purchasing, view this video. Even better, join the Somerville Public Library and the Somerville Fair Housing Commission in a discussion of Richard Rothstein’s book The Color of Law.