The real estate market has exploded, thanks to historically low interest rates, and those without a lot of cash on hand are struggling to compete. NBC 7’s Alexis Rivas reports.
Daniel Derr has served in the Navy for nearly 16 years, calling San Diego home for the past 12. Last year, he decided it was finally time to buy his first house.
“The rates were really low, and it was a really good time to get into the home-buying market,” Derr said. “I had just gotten my credit to where I was comfortable with actually applying for a loan.”
Derr was approved for a VA loan, which will allow him to buy without a down payment -- a huge benefit for a first-time home buyer without a lot of cash on hand. Derr said, however, that he quickly discovered he couldn’t compete in today’s resale market.
Realtor Anthony Reanue said the market is so hot right now that buyers are pulling out all the stops.
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“We had someone offer a car,” Reanue said. “And then offers went as high as $120,000 over asking.”
Reanue said he works with a lot of military families and first-time home buyers. He said his clients, like Derr, have been struggling to compete in the current market.
Derr thought he was finally on his way to homeownership when he found new townhomes in Chula Vista. The builder, Lennar, told him if he prequalified with their lender, he would be added to their priority list.
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“And that priority list is just pretty much a waiting game," Derr explained. "It’s first-come, first-served. You just wait your turn."
Derr said he was told that when his name came up on the list, he would be able to choose from the available inventory, which has set prices. There would be no submitting of offers or competing with other buyers.
Derr was prequalified and added to the list in January. Then in March, he said, he was told that Lennar was changing its business model for the Chula Vista townhomes and would be inviting everyone on its priority list to make offers on homes as they become available.
This meant Derr would, once again, be competing against buyers who may be willing to pay over the asking price.
Lennar said they made the change to give everyone on their priority list a chance to make an offer on a home. Basically, with demand so high, they weren’t going to get to everyone on the list.
They sent the following statement:
“In this time of unprecedented lack of inventory and strong demand in local real estate markets, we’ve replaced the waiting list process at this community -- which is uncertain for the homebuyer and for many people doesn’t provide the opportunity to make an offer on a home -- with an innovative Offers Program which gives everyone on the prequalification list a fair and equitable opportunity to make an offer on the right home for their budget.”
While Derr doesn’t plan to submit any offers to Lennar, he’s not giving up on his dream of owning a home one day.
“Well, I like to be optimistic, and I hope maybe the market kind of cools down a little bit, because I would love to be able to buy a home,” Derr said.
