Sept. 7, 2022
Tight housing market forces home buyers in SLO County to leave their priorities at the door
When Samantha Meyers and her family started their search for a new house during the remote work boom of the pandemic, they thought they’d be living in a different city from the one they ended up settling in.
Meyers said she originally intended to move from the Bay Area to San Luis Obispo, but ended up purchasing her home in Arroyo Grande instead.
“We loved the Sinsheimer neighborhood in SLO, and unfortunately it just didn’t end up working out — there weren’t homes with the size that we needed for our family and the space needs that we had, so we ended up looking in Arroyo Grande,” Meyers said.
Her family also had to compromise on price, as she had to offer around $75,000 more than the asking price to purchase the property.
Meyers’ story is becoming more common as the tight housing market in SLO County and elsewhere is forcing home buyers to compromise more than they might normally on the specific demands of their homes-to-be, according to a new report from Anytime Estimate.
In fact, the vast majority of home buyers — 80% — are scaling back expectations on the priorities in their housing search in some way, the report said.
“Most people are having to see the purchase of a home as a project, and realizing that they need to maybe live there a little while and then get some of the updates,” said Christa Lowry, a Coldwell Banker Premiere Real Estate Realtor in Pismo Beach.
“For a lot of buyers, especially if it’s their first or second purchase, compromises are involved just because what their dollars get them and what their dreams are aren’t necessarily in line,” Harn said.
Harn said that in much of SLO County, homes only average seven to 10 days on the market, giving buyers a small window to make a decision.
“I typically would tell people if (the home) meets about 70% of their needs, wants and desires, to strongly consider it and to maybe consider driving by it a couple of different times during the day, (and) walking around the neighborhood to get a feel,” Harn said.
Amenities such as the type of kitchen, flooring and finishes, Lowry said, are of less concern than simply getting a house in the first place. Plus, those issues can be addressed through remodeling later.
Sometimes, the competition is so tough, buyers have to give in on more prominent features of the home, like its number of bedrooms.
None of those factors seem to deter buyers, who are now looking for available housing rather than housing that fits their specific needs, Lowry said.
That being said, Lowry noted that remodeling a fixer-upper is also more of a challenge now than it once was.
“The cost of goods is so high right now that people are having a hard time with their fixer-uppers because they can’t update it as much as they want,” she said.
Harn advised first-time buyers to avoid fixer-uppers that require larger investments of time, labor and money, particularly once the cost starts exceeding $40,000 to $50,000.
Cosmetic upgrades like paint or replacing countertops are much more feasible for first-time buyers, Harn said. Further complicating the remodeling process, Lowry said, building goods such as lumber are in low supply, raising their price. The price of building goods is also elevated by inflation, which is still affecting the construction industry, she said.
Those supply chain delays limit what buyers can do with a fixer-upper, Lowry said.
If a bathroom used to cost around $15,000 before the current period of inflation and supply chain problems, it now costs closer to $22,000 or $25,000, she said.
MORE BUYERS CHOOSING FIXER-UPPER HOMES
The report agreed with Lowry’s experience, as 55% of buyers purchased what they considered a fixer-upper, though 24% of those buyers regretted their decision to buy a home that requires extra maintenance.
“Because they’re just excited to have a home — to be able to purchase a home — they’re willing to give up a lot,” Lowry said.
Younger, first-time buyers in particular — like millennials, who the study found make up 66% of first-time buyers — are more likely to spend more and take larger risks on their first home, the report said.
“We are seeing more and more millennials get into the housing market, and I think it’s a very wise thing for them to do as wealth shifts from Baby Boomers down to the next generation,” Harn said.
These younger first-time home buyers were 8% more likely to compromise on their demands for a new home, the report said, and 22% of all buyers in the survey ended up dissatisfied with their homes.
“After previously buying in ‘normal’ market conditions, repeat buyers were 75% more likely than new buyers to be dissatisfied, but the market left much to be desired among first-timers who struggled to find affordable homes,” the report said.
Lowry said priorities in home buying on the Central Coast differ from the three things the survey had found most buyers prioritized: a good neighborhood (50%), an affordable home (45%) and short commute (39%).
In her experience with buyers here, Lowry said, home-buying priorities focused more on the home’s floor plan, location and potential for future investments.
“Can we update it and sell it for more?” she said. “Does it have enough room or land to do what we’d like to do with it? Could we build on an ADU (accessory dwelling unit) or extra room that we could use as income potential?”
Harn said with the advent of widespread remote work, concerns over length of commute are lessened, while access to school districts and outdoor space are more relevant to the average SLO County home buyer.
That was the case for Meyers, though she said her home in Arroyo Grande has met her needs so far.
“Even though we thought we compromised to begin with, I think that where we ended up was actually the optimal solution for us,” she said.
This story was originally published SEPTEMBER 07, 2022 5:00 AM by JOHN LYNCH