Robert Andion spent two years watching the housing market in Tampa. A couple of months ago, he sensed an opportunity.
Home prices were still high and multiple offers were still the norm – he lost out on four bids – but homes were taking a bit longer to sell. And sellers, it seemed, were willing to make some concessions.
The 23-year-old software engineer took a chance and offered about $5,000 below asking on a two-bedroom, two-bathroom condo. The owners accepted and he closed in April at $230,000.
“I felt there’s definitely more room to play. I feel like the harder part is just getting your offer accepted upfront,” he says. “I was happy that I was able to get 5,000 off when I made my offer. The less desirable homes were actually staying on the market for a little bit, which, when it was hotter, were selling immediately, you know?”
A recent Opendoor survey bears out Andion’s hunch. The survey found that prospective sellers (76%) and buyers (80%) are willing to make concessions to expedite the process, the survey found. Opendoor surveyed 833 current and prospective buyers and sellers between the ages of 21-75.
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When it comes to concessions, being flexible on the closing date is something most buyers (75%) and sellers (69%) are willing to do; 42% of sellers and 53% of buyers are willing to pay for inspection fee and 41% of sellers are willing to reduce their asking price, while just 27% of buyers are willing to increase their price bid.
“Right now, sellers do have the upper hand but it’s not all doom and gloom for the buyers,” says Amit Arora, vice president of investments at Opendoor. “The survey shows that there are ways to get deals done and that both buyers and sellers are on the same page with concessions.”
That was the case with Andion, who, in addition to the $5,000 reduction in the asking price also got the owners to replace a hot water heater, fix a leaky sink and pay for a home warranty worth $700 for a year.
Florida home prices had skyrocketed since he first started looking. The median price of a home in Tampa in April was $420,000, up 87% compared to April 2018, when it stood at $225,000. But neither the high prices nor the current uncertainty in the housing market, where both buyers and sellers are sitting on the sidelines, fazed him.
“To me, renting is kind of like burning your money. I wanted to avoid renting at all costs,” he says.
Andion, who put down a 10% down payment, says his mortgage comes to $1,600 per month plus $300 a month in HOA fees, about the same if he had rented a two-bedroom apartment. A two-bedroom apartment rents for about $1,700 – $1,950 a month, according to various listing sources.
Andion saved $40,000 toward a down payment and other expenses in about five years thanks to a full ride scholarship at the University of South Florida, a couple of research/teaching jobs at the university, working three days as a house painter since age 18, and living rent free with his parents throughout college, he says.
Before beginning his house hunt, he was pre-approved for a loan and took a 30-year conventional loan at a 6.25% mortgage rate to purchase the condo.
At first, his parents were a bit skeptical.
“They were warning me because they’re like, you know, you’ve never had big bills like that. You’re very young, make sure. But I talked it out with them,” he says. “I’m kind of just like, once I set my mind to something, I’m going to hit that goal. That’s very much how I am.”
He says he has no plans to move from Tampa in the next five years and hopes to build some equity in the condo. For now, the Gen Z-er is getting used to his new digs and admits to feeling a “little strange” to be a homeowner at his age.
“So far, I don’t have any regrets about it. I think it was a good decision,” he says. “I’m really enjoying having my own place. Every now and then, I just stop and think like, this is mine. It’s kind of a weird thing to get used to.”
Here are some insights from the Opendoor survey:
∙ 93% of buyers and sellers think homes on the current market are overpriced—a sentiment you’d think would slow down buyers, but hasn’t. Instead, homes are selling at a faster pace (not more home, but the rate of sales) this year compared to 2019, which was a year when new construction rose, home purchases increased, and affordability went up.
· When asked about housing market concerns, both buyers and sellers ranked interest rates first, with home affordability and a weak economy coming in second and third, respectively. Economic concerns may be creating hesitancy, resulting in some buyers and sellers opting to postpone their move altogether. Those postponing are more likely to say that housing affordability is one of their top two concerns about the housing market compared to those not postponing their move (56% vs. 48%).
· While more than 60% of buyers and sellers agree the economy will struggle this year, there’s disagreement when it comes to home price predictions. On the question of whether home prices will increase in 2023, generations are divided: only 41% of Baby Boomers predict home prices will increase this year, compared to 72% of Gen Z.
· Offer Expectations are not aligned: The majority of buyers (73%) plan to bid at or below the asking price, while 36% of sellers expect an offer above the asking price.
· When it comes to concessions they’re willing to make, 41% of sellers are willing to reduce their asking price, while just 27% of buyers are willing to increase their price bid.
· The good news is that both prospective sellers (76%) and buyers (80%) indicate a willingness to make concessions to expedite their process. The top three? Flexibility on the closing date, paying for inspection fees, and paying for closing costs.
Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.
