As the low level of single-family homes for sale continues throughout the U.S., there is a growing segment of the home buyer pool that is invisible. I like to refer to this group as buyers “waiting in the wings“.
The Rise of Buyers Waiting in the Wings
So let’s take a closer look at these home buyers. Many of these buyers participated in the recent Spring/Summer housing frenzy. Much of the overall surge in buyer demand has been a consequence of Covid. People were leaving the urban areas in favor of the spacious suburbs. The opportunity to work-from-home became an unforeseen reality.
Covid accelerated the timing of this shift to the suburban lifestyle for so many people, and it did so in such a concentrated period of time, much like a “flash flood“. No one saw this coming and the housing market was simply not ready. Too many buyers were chasing a limited supply of homes for sale. And so the frenzied buyer market catapulted into existence.
The would-be-buyers who lost out in bidding wars found themselves considering other housing options. Some chose to rent in the suburbs. Some opted to move into their parent’s suburban homes. And others experienced “buyer fatigue” and put their home search on pause, while others chose not to move at all, with many simply renewing their rental lease on a month-to-month basis.
Buyers “Waiting in the Wings” – What are They Waiting For?
It is this group of buyers who collectively are “waiting in the wings”. They are waiting on the sidelines for the “right” house to come along. These buyers do not look at homes in-person on the weekend, giving rise to the perception that the housing market has slowed down. And in my New Jersey markets, these “invisible” buyers are real buyers and they are coming out strong when there is a home that is simply irresistible. Perhaps this is why we are continuing to see homes just listed on the market in the months leading into the holiday season. The buyers are out there.
So What Is the “Right” House ?
Here in my New Jersey markets of Essex, Morris and Union counties, I am finding that many buyers are looking for essentially the same short list of things, across all price points. (The list is actually well into double-digits, but I wanted to highlight the most prevalent.) In no particular order:
a) spacious layout with lots of natural sunlight
b) move-in ready with minimal cosmetic/decorative fixes needed (no construction/renovation)
c) a breathable home where bedrooms are not close to one another
d) an ensuite bathroom for the primary bedroom
e) 1st floor family room or large gathering room for entertaining with family and friends
f) home office
g) extra bedroom (preferably on the 1st floor) for extended family
h) basement with high ceiling
i) large flat backyard
j) major systems (HVAC, plumbing, electrical, etc) and roof in good condition and will not need replacing in the next few years
k) fair price for what the home delivers and not feel they are “over paying” simply because there is not a lot of inventory.
Is This a Viable Strategy?
So if Covid accelerated the move to the suburbs, one of the big questions is whether this is a new preference. In other words, is this suburban shift a new buyer trend that is here to stay for awhile? Are the buyer values changing as to what “home” means to them? From my perspective, this “preference” has become somewhat nuanced.
Some buyers here in New Jersey are clearly looking to make a full swap of the urban lifestyle for the suburbs. There are also other buyers who are looking to retain their urban lifestyle and complement it with a weekend home in the more rural areas, possibly “off the grid” completely. I have a number of buyers who are currently searching for homes and/or land in areas that are over an hour drive from New York City.
Tweaking the Home Buying Strategy
If you are one of those buyers “waiting in the wings” for that “right” house to come along, I recommend tweaking your home buying strategy. Here’s how.
1. Mindset – The reality is that there is no “perfect” house. Think differently. Think 80/10/10. The “right” house needs to offer you essentially 80 percent of what you are looking for. 10 percent of the house you are willing to change (either when you move in or in a few years). And 10 percent is simply what is and cannot be changed, such as a corner location.
2. Town – If you’ve been focusing on one or two towns and have become frustrated with the constant multiple bids on every house you like, guess what? Waiting a few months probably won’t make a difference. Quite the opposite. I foresee even more buyers to compete with.
The 2022 buyer pool will consist largely of 4 groups:
1) buyers “waiting in the wings”
2) buyers who would be moving anyway
3) buyers who never really thought about moving, but whose lifestyle preferences have changed
4) buyers who are “re-shuffling” into different geographic areas due to a job change.
What to do in a highly competitive market? You may want to consider broadening your home search to include other towns. And as you expand your home search, you just might find the “right” house for you is in a different town. The good news? This home may now be within your price range, even if there are multiple offers!
3. Price – If your budget has fallen short of winning a multiple bid, perhaps an alternative approach is needed. Instead of looking at homes at the top of your budget, why not be the “big fish” in the “small pond”? In other words, look at homes in a lower price range. This will give you more leverage in negotiating a stronger offer. More than likely, you will have greater purchasing power than other buyers in this lower price range.
Keep in mind that the homes at this lower price point might not check all the boxes for you. You will need to re-prioritize your search criteria. For example, instead of the home being “move-in ready”, it may offer you the opportunity to renovate and customize the home to your specific style. For example, it could be that there are 1.5 baths instead of 2 full baths, but the half bath could be expanded into a full bath. The key is to be open. Remember the 80/10/10 rule!
4. House Style – With limited inventory to choose from, your dream home might just be hiding in plain sight. It could be that one of your search criteria is to find a “colonial” style of home. Some of the older colonial homes that are popular here in New Jersey might have a footprint that does not offer the more modern and open layout that you are looking for. If you are receptive to a wide range of house styles, you might find, for example, that a “split-level” home will surprise you with a floor plan design that is both open and intuitive (e.g. when you enter the house via the garage entrance, there is a powder room nearby along with a pantry for unloading your groceries).
House Hunting in 2022?
While the housing market will remain competitive in 2022, you do not need to be “waiting in the wings” for that right house to come along. Get out early and see homes in-person. See if what you are looking for in your price range exists in the towns where you would like to buy a home. Sharpen your pencil and fine-tune your search criteria. And then tweak your home buying strategy.
For greater insights as to how to successfully navigate the 2022 housing market, you can reach out to me at [email protected] or 908-239-9261. Whether you are house hunting in New Jersey or in another state, I can assist you and collaborate with my Compass colleagues located in over 300 cities across the U.S.
My Bird’s-eye View –
Why Home Buyers are “Waiting in the Wings”
November 2021. All Rights Reserved.
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