Thinking About Buying a Home?

[caption id="attachment_2821" align="alignleft" width="213" caption="Buying Your First Home?"][/caption]

Buying your first home is a nerve-wracking, surreal and monumental achievement for anybody, especially in today's housing market. Megan Mcardle of The Atlantic discusses what it's like to go through buying your first home in her article "The Two-Tier Housing Market."

So since we became homeowners, I've become more interested in HGTV.  Not obsessively so, but I have more interested in watching programs about renovations and such.

One of the shows I've watched is called "Property Virgins".  The plot is about like it sounds: first time homebuyers try to find a place.

What's interesting is how many of the homeowners have trouble getting their offers accepted.  The shows filmed post-crash, and while it's by no means universal, a number of the couples on the show put in an offer only to lose the house . . . and a substantial minority put in offer after offer, only to lose again and again.  And what's really interesting is that this happens in places like Florida and California, where you would think it would be easy to find a house.

I wonder if they aren't experiencing something like I described when we were hunting for a house.  In the neighborhoods we wanted to buy in here, there was a lot of inventory--homes that were wildly overpriced.  Those homes sat on the market for months, even years.  Meanwhile, anything that came on at a reasonable price went to contract within a week, and usually within a couple of days--we made an offer on the house we now own the day it came on the market, and this was far from unusual.  Bidding wars on these properties were frequent--universal, in the months before the first-time homebuyer tax credit expired.

This sort of rapid-fire bidding is bubble behavior; it's not supposed to characterize a normal market. While well-priced houses always sell faster, this level of bifurcation is extreme (or so my real-estate agent mother assures me).  She also assures me that putting things on the market high, and then lowering your price if it doesn't sell, is lousy strategy--once something's been on the market for a while, it's damaged goods.  Price reductions don't get the same enthusiasm as new listings, so if your house is wildly overpriced, you're going to end up selling it for less, not more.