Fixer-Uppers in Demand as Buyers Seek Affordable Options in Tight Housing Market

 

Existing home sales hit a 14-year low in September, according to the National Association of Realtors (NAR). Meanwhile, the Federal Reserve’s Beige Book hinted at a potential shift in the housing market, noting an increase in inventory across the country. In Virginia, for instance, agents are seeing a rise in “fixer-uppers and less-than-ideal homes” hitting the market.

Take Corita Stull, a single mom in Baltimore. The rental home she shares with her four sons has its quirks—including a toilet that often requires “bucket flushing” to get the job done. Despite the maintenance challenges, Stull hopes to buy the home when it goes up for sale, embracing the “fixer-upper” option as a necessary path to homeownership in today’s market.

During the pandemic, buyers sought move-in-ready homes, with immediate gratification being the name of the game. But with fewer turnkey homes available, the spotlight is turning back to properties that need a little TLC. “The fixer-upper market has more supply than we’ve seen in recent years,” says Jonathan Miller, CEO of real estate appraisal firm Miller Samuel.

Alongside the growing interest in fixer-uppers, home prices continue to rise. September marked the 15th consecutive month of year-over-year price increases, with the median price up 3% compared to last year. Buyers like Stull are finding that homes in need of repairs offer a more affordable entry into the market.

However, potential buyers should approach these homes with eyes wide open. “Many buyers are turning to fixer-uppers to enter the market at a lower price point,” says Nadia Evangelou, senior economist with NAR. But she cautions that the cost of renovations has soared, with building materials and labor prices on the rise. This can sometimes make renovations more costly than anticipated.

Even Evangelou knows the struggle firsthand. Since purchasing her own home in Virginia in 2018, she’s completed interior updates but is still holding off on outdoor renovations due to rising costs.

For buyers who are ready to take on a fixer-upper, the payoff can be worth it—but be sure to budget for potential surprises.

Original article: Why fixer-uppers are having a moment in the housing market - Marketplace

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