This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Buying a First Home Costs More Than You Think, Especially Now
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Business > Buying a First Home Costs More Than You Think, Especially Now
Business

Buying a First Home Costs More Than You Think, Especially Now

Editorial Board Published February 4, 2022
Share
Buying a First Home Costs More Than You Think, Especially Now
SHARE

Buying a first home is always stressful. Buying now, with property price increases eating into savings and inflation driving up the cost of home repairs, is proving to be particularly costly for some first-time buyers.

Contents
Kathleen Jacob and Eric Hilt at their Nashville home. On the 95-degree day they moved in, the central air-conditioning unit failed.A stack of bills in Kathleen Jacob’s home, and a hammer used for repairs around the home.SHARE YOUR THOUGHTSA yard ornament at Kathleen Jacob’s Nashville home.The Hot Housing Market

New buyers are putting more money into down payments and increased closing costs as prices go up. To compete in the current market, buyers are also waiving inspections and making fast deals, brokers say—decisions that pose big risks and potentially bigger costs.

Waiving an inspection can often mean buyers face needed repairs shortly after moving in, just when budgets are already stretched thin. And the cost of those repairs is higher than usual right now, thanks to labor shortages and inflation pushing up the price of goods. Inflation rose 7% in December, as prices for appliances, household furnishings and household operations all increased.

U.S. home prices hit a record high in 2021, but those increases are expected to slow in 2022 thanks to a number of economic factors. Here is what’s driving the housing market and what that could mean for prospective buyers and sellers. Photo: George Frey/Bloomberg News

First-time buyers also tend to have lower credit scores—a median of 720 versus 753 for repeat buyers, according to federal mortgage data compiled by the American Enterprise Institute. The lower the credit score, the higher the interest rate, so those new buyers are paying more every month on their mortgage than more creditworthy buyers would.

“First-time home buyers are least equipped to do things like waive an inspection or overbid,” said Ed Pinto, director of the AEI Housing Center.

Kathleen Jacob and her boyfriend Eric Hilt lost three different Nashville, Tenn., houses to higher bidders, despite offering more than $40,000 over ask on some of the homes. Last summer, the couple was thrilled when their $461,000 offer was chosen for a 112-year-old 1,100-square-foot house. The seller had two conditions: waive the inspection and promise to go through with the deal even if the property was appraised below the purchase price.

They did it anyway.

Kathleen Jacob and Eric Hilt at their Nashville home. On the 95-degree day they moved in, the central air-conditioning unit failed.

Photo: PHOTO: ROSS MARTIN FOR THE WALL STREET JOURNAL

“Some people will say you’re crazy,” said Ms. Jacob, a 30-year-old public information officer.

“But when there are 12 to 15 other offers on the same house you’re forced to waive to stay competitive.”

On the couple’s moving day, a 95-degree scorcher, the home’s central air-conditioning unit gave out.

The new unit and installation cost about $7,000, and they opted for a payment plan that offered zero interest for five years. The couple still had roughly $15,000 left in their emergency account but decided to finance the new system so they could pay for any other unexpected expenses.

First-time buyers made up 34% of all home buyers in 2021, compared with 31% in 2020, according to a National Association of Realtors survey. Nationwide, first-time home buyers paid a median price of $252,000 in 2021, more than 9.5% higher than in 2020, said NAR. Recently sold homes were on the market for a median of one week, a drop from three weeks in 2020, the survey found.

Natalie Lvova and her husband Lev Blinchik said they had 15 minutes to walk through their home in Highlands Ranch, Colo., before they had to decide whether to make an offer.

They didn’t notice that many of the home’s windows didn’t open or close properly. They had an inspection, but the inspector missed the window problems, Ms. Lvova said. The next shock came with the quotes for repairing the windows: roughly $50,000.

A stack of bills in Kathleen Jacob’s home, and a hammer used for repairs around the home.

Ms. Lvova, 44, had budgeted about $15,000. The couple is going in phases, repairing windows in the bedrooms and living room first and paying for the fixes with credit cards.

Ms. Lvova is hardly alone in facing rising costs. The average cost to care for a single-family home rose 9.3% to $4,886 in 2021, compared with the prior year, driven in part by labor and material shortages, according to online-services marketplace Thumbtack Inc.

SHARE YOUR THOUGHTS

Have you experienced any home buying surprises in this crazy market? Share with us in the comments. Join the conversation below.

Cheryl Costa, a financial planner in Framingham, Mass., said she advises clients to budget for maintenance and repairs totaling 1% to 3% of the home’s value every year. For a $500,000 house that is $5,000 to $15,000.

Ms. Costa recommends speaking to prospective neighbors to ask about flooding; bringing a home inspector along for the tour if sellers seem likely to demand waiving an inspection; and asking questions about anything that seems odd in the disclosures on the home’s listing. While touring the house, take a picture of the hot-water heater, she suggested. It usually has a tag on it from the most recent servicer, and a buyer can try to contact that company to get more information about the system, she said.

About a year and a half ago, Max Sturm, 34, and his wife Gabrielle Sturm, 31, thought they had found their dream home, a three-bedroom house with a finished basement in Montclair, N.J.

About three weeks before closing, they learned they would need flood insurance. Neither the real-estate agent nor the seller had disclosed the home was in a flood zone.

A yard ornament at Kathleen Jacob’s Nashville home.

Further investigation uncovered that prior owners had filed flood-related claims with the Federal Emergency Management Agency. The couple was eventually able to get the seller to return their $60,000 deposit and terminate the contract.

The Sturms are now renting in East Rutherford, N.J., until the housing market cools down—and they regain their nerve.

“We’re still rocked from that first-time experience,” Mr. Sturm said.

Write to Veronica Dagher at veronica.dagher@wsj.com

The Hot Housing Market

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:Business NewsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article Stock Futures Rise After Tech Selloff Stock Futures Rise After Tech Selloff
Next Article For Sony and Nintendo, Supply-Chain Pile-Up Is Just a Speed Bump For Sony and Nintendo, Supply-Chain Pile-Up Is Just a Speed Bump

Editor's Pick

JPMorgan unveils its 2025 summer season studying record

JPMorgan unveils its 2025 summer season studying record

JPMorgan Chase Chairman and CEO Jamie Dimon on the significance of management abilities, deregulation coverage, power independence and the Federal…

By Editorial Board 4 Min Read
Man shot and killed on one hundredth Avenue in Oakland on Saturday
Man shot and killed on one hundredth Avenue in Oakland on Saturday

Oakland police are investigating the loss of life of a person, 34,…

1 Min Read
Japan to Start Medical Trials for Synthetic Blood This 12 months
Japan to Start Medical Trials for Synthetic Blood This 12 months

credit score – Adrian Sulyok on Unsplash Japan is the primary nation…

4 Min Read

Oponion

They referred to as for pressing assist with a mentally unwell beloved one. Why California police refused

They referred to as for pressing assist with a mentally unwell beloved one. Why California police refused

By Lee Romney, CalMatters Susanna’s Sacramento County dwelling bears the…

May 5, 2025

Kelly Ripa & ‘Defensive’ Mark Consuelos Focus on Divorce On ‘Stay’

Is Kelly Ripa contemplating a divorce?…

October 15, 2024

Jamie Dimon Gets $3 Million Raise to $34.5 Million for 2021

Jamie Dimon, chief executive of JPMorgan…

January 20, 2022

RFK Jr. and Gabbard advance after final GOP holdouts cave

Tulsi Gabbard and Robert F. Kennedy…

February 4, 2025

Tori Spelling By no means Drinks Water, Likens Self to Miraculous Cactus

Studying Time: 4 minutes Is Tori…

March 12, 2025

You Might Also Like

Omnispace, Gatehouse Satcom and Nordic Semiconductor Exhibit 5G NB-IoT Functionality over Non-Geostationary S-band Satellite tv for pc
Business

Omnispace, Gatehouse Satcom and Nordic Semiconductor Exhibit 5G NB-IoT Functionality over Non-Geostationary S-band Satellite tv for pc

Omnispace, Gatehouse Satcom, and Nordic Semiconductor, at the moment introduced the profitable demonstration of a 5G narrowband Web of Issues…

3 Min Read
74% of asset monitoring initiatives meet or exceed ROI expectations
Business

74% of asset monitoring initiatives meet or exceed ROI expectations

Companies adopting IoT asset monitoring options prioritize wonderful vendor help and seamless integration capabilities over an intensive checklist of options,…

2 Min Read
Iridium and Syniverse Companion to Convey Direct-to-Gadget Satellite tv for pc Connectivity to Cellular Community Operators Worldwide
Business

Iridium and Syniverse Companion to Convey Direct-to-Gadget Satellite tv for pc Connectivity to Cellular Community Operators Worldwide

Iridium Communications Inc., a number one supplier of world voice and knowledge satellite tv for pc communications, right now introduced…

3 Min Read
3 Modern Methods Healthcare Companies Use Tech To Enhance The Affected person Expertise
Business

3 Modern Methods Healthcare Companies Use Tech To Enhance The Affected person Expertise

The healthcare trade is among the largest proponents of know-how use all through the office. It’s an trade stuffed with…

4 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?