Deep-pocketed investors are snapping up properties throughout small-town America, frustrating home buyers who are increasingly losing out to their all-cash offers.
One of those buyers is Dominic Pollock from Bethlehem, Pa. He and his fiancé have viewed more than 50 houses and have made more than 20 offers on houses over nine months. But they are constantly getting outbid, despite bidding above asking price. The couple bid $20,500 above asking price on a house this week and waived the right for a home inspection. But the result was the same. Their real estate agent received an email back from the listing agent: There were 14 bids and they had lost out again.
“There were days that I came home crying,” Brooke Terplan, Pollock’s fiancé, told The Wall Street Journal about her frustration over rejected bids and the couple’s inability to find a house before they get married. “A couple people told us that it was going to be tough,” Pollock added, ”but we couldn't even fathom what we'd walk into.”
Small-town America is seeing the same bidding wars that have become the norm for most markets. Local home buyers are finding themselves increasingly up against investors, who comprise about a fifth of annual home sales nationwide, The Wall Street Journal reports.
Investors are being drawn to smaller towns because home prices and taxes tend to be lower. The cash flow opportunities in buying properties to rent them out may be greater than in the city.
As a result, individual home buyers are finding it difficult to compete. Investors often offer an all-cash sale with no inspections and may make “sight unseen” offers and quickly.
The housing demand in small towns has caught home buyers in those locations off guard.
For example, the median list price for a house in the metro area surrounding Allentown, Pa., surged 24% in January compared to a year earlier, according to realtor.com® data. Martin, Tenn., a small town 150 miles outside of Nashville, is seeing median asking prices climb 159% over the same period. In Kendallville, Ind., about 30 miles outside of Fort Wayne, prices jumped 56%.
Buyers are feeling the pressure to make quick decisions if they are to have any shot at competing against investors or other buyers. More buyers are waiving inspections in their bids and making other concessions.
“If you’re a buyer, this is the most frustrating time,” Jonathan Campbell, vice president of DLP Realty in Bethlehem, told The Wall Street Journal.