Almost as soon as the 1,200-square-foot Cape Cod home went on the market in early April, a flurry of calls came in. Priced at $400,000 in tony Bergen County, New Jersey, across the river from Manhattan, it was the rare single-family home under $500,000.
By the end of the weekend, over 90 people had seen the house, with 20 offers above the asking price. A couple in their 20s won the bidding war. They had to get their parents to sign a promise of funds in case the house doesn’t appraise for the offer amount.
“I felt terrible,” said Maxwell Stokes, the listing agent at Compass Real Estate. “There are just so many young buyers out there.”
Even as mortgage interest rates drop and home sales cool across the country, it is still more difficult than ever to buy a home. Inventory remains low, and median sale prices continue to climb.
According to The Kobeissi Letter, a financial newsletter that measures and analyzes various markets, the median home price in the United States is up 45% over the past three years to $468,000. That makes it financially harder than ever to own a home in America.
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Here are where the top 10 most expensive markets are in the country according to The Kobeissil Letter:
1. Hawaii: $835,000
2. California: $719,000
3. Washington: $553,000
4. Massachusetts: $545,000
5. Colorado: $530,000
6. Utah: $496,000
7. Oregon: $474,000
8. New Jersey: $440,000
9. Idaho: $431,000
10. New Hampshire: $421,000
Now contrast that with the states with the highest median household income according to data in The Kobeissil Letter.
1. Maryland: $96,000
2. New Jersey: $94,000
3. Massachusetts: $93,500
4. Hawaii: $92,000
5. California: $88,000
6. Connecticut: $87,800
7. New Hampshire: $87,600
8. Washington: $86,500
9. Virginia: $84,000
10. Colorado: $84,000
Housing affordability is at new lows, according to the data. There are now 30 states where 30% of the household income is spent on housing, according to The Kobeissi Letter.
To be a competitive buyer in the current market, buyers are being creative, Stokes said. Even though real estate agents advise against sending “love letters” to the seller, the buyers are doing so directly. On the $400,000 home in Waldwick, New Jersey, that went on the market last week, would-be buyers sent letters describing their situation and how much they loved the house, Stokes said.
Buyers are also waiving the right to inspections and getting financial guarantees from other sources in case the house does not appraise for the amount offered.
“They’re pulling out all the stops,” Stokes said of buyers in the current market. “There’s just not a lot of homes for sale.”
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