This as-told-to essay is based on a conversation with Orphe Divounguy, a senior economist at Zillow. In April, Divounguy purchased a home in Raleigh, North Carolina. The conversation has been edited for length and clarity.
I’ve been with Zillow for almost three years. As a senior economist, I provide internal and external insights about housing. So, I do a lot of TV and radio interviews, discussing its dynamics with various audiences.
While I am well-informed, I don’t have a competitive advantage as a homebuyer: Zillow’s housing data and metrics for buyer competition are publicly available on its website.
Right now, Zillow’s data shows that buyers have more bargaining power for the first time in a long time. That’s because nationally, housing inventory is above 20% from a year ago, meaning there are more homes for sale today than in August 2020.
When I started my homebuying journey last year, I expected it to be very easy and was hopeful that I could get my pick without trouble. Unfortunately, I learned there is no national housing market; instead, housing is very much local.
I witnessed it firsthand. The community I wanted to buy a home in, Raleigh, North Carolina, was extremely competitive, and two of my initial home offers were rejected. It was a reality check for me.
Raleigh is the perfect place for my family
I work in housing; I watch only housing and real estate TV shows. I’m also the kind of person who takes my kids to open houses on the weekends for fun — I just love it.
I’m always looking at homes. Last year, I bought a townhome in Tennessee and turned it into a rental property, and I was interested in doing something similar again.
I decided to look for an investment property in the Raleigh-Durham area because it’s one of the fastest-growing metro areas in the country.
After visiting the area, I fell in love with the city and the community feel. I started contemplating whether I should just buy a home for my family and move there.
I connected with a real estate agent, flew in overnight on Friday, and spent the weekend exploring Raleigh’s neighborhoods. I ended up falling in love with the Research Triangle Park area.
Research Triangle Park has a strong tech presence, similar to where I live in Seattle. You’ve got a growing tech industry, a good healthcare sector, and access to great schools like Duke University, North Carolina State University, and the University of North Carolina at Chapel Hill.
With all these opportunities, I’m hopeful my kids won’t want to move away from home when they’re older and will stay in the area.
There was more competition for homes than I expected
In April, I found my dream house: a 3,250-square-foot home in the Research Triangle Park area that was on the market for $730,000.
Our agent suggested we consider going a bit above the asking price, so I submitted an offer, but unfortunately, I lost the house. After only being on the market for six days, the home sold for about $50,000 over the asking price.
While buyers might have more power nationally, local data suggests that the Raleigh area remains a seller’s market. According to Zillow’s Market Heat Index, inventory is still low in many neighborhoods, so sellers continue to have a ton of bargaining power.
I tried again when a smaller 2,900-square-foot home with a giant tree swing for the kids popped up for $630,000.
We also fell in love with this house. It sits in a neighborhood filled with custom-built homes, golf courses, swimming and tennis clubs, and fantastic amenities. It also feels like the type of place where kids walk to school together in the morning and back home in the afternoon.
By this point, I realized I had previously underestimated Research Triangle Park’s homebuying competitiveness the first time. The area is in high demand, so I came in strong, offering about $50,000 over asking.
Still, we ended up losing the house. It sold after just one open house. There were lines of parked cars around the block to see this house.
The ordeal made my family cry. I can laugh about it now, but the reality is, I look at this data all the time. According to Zillow’s Consumer Housing Trends Report, more than half of buyers cry at least once during the homebuying journey.
I’m deeply familiar with everything we know at Zillow about the ups and downs of shopping for a home, but I still didn’t think it would happen to me.
The third time was the charm
Eventually, I had to fly back to Seattle, so I began relying entirely on my agent, who was much more familiar with the area. I also had Zillow alerts set up for my preferred neighborhood and checked them daily.
Finally, my agent got a call from another agent who said she knew of a homeowner who may be willing to sell if we agreed to all their demands.
We saw photos of the house — it was perfect. It’s a 3,000-square-foot home, located within the same community we had fallen in love with.
After a quick home inspection, we agreed to all their demands and closed in April. One of the sellers’ conditions was to be able to live in the house for another 2 months after closing.
Our family is excited. We’re counting down the days until we can move in in July.
Hindsight is 20/20 — but here’s what I would have done differently
Looking back, I think the first thing I should have done when starting my homebuying search was pay attention to local market dynamics. It’s not enough to look at the national headlines.
If I had, I would have been more prepared and taken my agent slightly more seriously when she told me Raleigh’s market was somewhat competitive.
The housing market varies greatly across the country. In some places, supply is so constrained that every time a home comes on the market, it’s available for maybe just seven days. In other worlds, inventory accumulates, and buyers have a lot more bargaining power, like in Texas and Florida.
Going forward, I’m paying more attention to local dynamics. I think it’s important to dig into the details — to look at the specific district, the geographic distribution, and the price point. Analyzing this is incredibly informative in understanding where we are in the housing market today.
Read the full article here
