Interest rates are at record lows, but many people can’t find a home to buy

MEMPHIS, Tenn. — If you’ve been trying to buy a house, it’s been almost impossible in Memphis.

It’s the same in many parts of the country. Real estate professionals say right now there are more real estate agents in the country than properties for sale. But why is this the case?

FOX13 talked to professionals and some first-time homebuyers, who say the homebuying process has never been harder in the Mid-South.

Marico and Danielle Cheeks have been trying to buy the perfect home for their family. They have a 2-year-old son and are expecting another child in five months. They’re hoping to buy a home to one day pass down to their children, but they say the process has not been easy.

“It wasn’t anything like a scheduled appointment where we have a little time to think about it. Not in today’s market,” said Danielle Cheeks. “You literally, if you saw a house on the market, you had to go that day. We were going to see three or four houses a day and in that same day they would decline it, so we had to make quick decisions.”

Denial after denial, month after month, they, like hundreds of others in Memphis, have been continuing to search for the perfect home.

“The market is so competitive right now that we would see the same people. Everybody that was purchasing homes, it would literally be like we’re following each other for the same homes,” Danielle Cheeks said.

Why is it almost impossible to buy a home?

Real estate professionals say it’s due to interest rates being so low at this point. People are able to save while buying more expensive homes for the same monthly payments. Rates are now around 3.6%, from a high of 5.3% in 2018. RE/MAX Affiliate Broker Eric Bell says this creates a push for investors to buy up homes for rental purposes, since the rates are so low that they are taking away homes from those first-time homebuyers.

“Due to COVID, we’ve seen a lot of people in smaller houses trying to move up into larger houses,” Bell said. “They need more room for their kids for school, and they might need an office or extra bedroom to work from home and things like that. They’re trying to upgrade into a bigger home.”

Bell says because of the huge spike in demand, it’s hard to keep houses on the market. Houses are sometimes selling the same day they’re posted, and others are gone within three days. He says there are nine to 10 buyers per house in the Mid-South. It’s something his company has never seen before in its 30-year history. Bell says it’s also harder for homes to be built, due to a lack of resources caused by the pandemic.

“There’s really just a shortness of resources right now,” he said. “With the builders trying to get in things like lumber, what we usually could build in six months two years ago is now taking nine months to a year for the exact same thing.”

So, buyers are jumping on any and every home available in Memphis, sometimes paying $30,000 to $50,000 over the asking price and cutting other deals.

“People are putting down nonrefundable deposits to try to compete with some of the cash offers,” Bell said. “They’re basically going in and saying, ‘I’ll give you your $5,000 earner’s money, but I’ll also give you a $10,000 nonrefundable deposit, so if you don’t close on my home you can keep my money.’ We’ve never seen that before because it’s a big risk to take, but people are desperate to get in homes.”

Bell says it’s heaven for homeowners who want to cash in on an overpriced market, but it’s not ideal for prospective buyers; it could cause problems for sellers if they’re trying to buy a home after selling.

According to the National Association of Realtors, existing home sales are up 10.5% year-over-year, and prices are climbing by 11.4%, which is a record. According to Bell, in Shelby County the average home is now priced around $200,000, up 15 to 20% over the past two years.

“We have no inventory,” he said. “The main problem we’re seeing right now is an inventory problem, which then turns into a supply and demand issue. If you’re selling a house, that’s great. If you’re buying a home, that’s difficult.”

For Marico and Danielle, they’ve been in touch with professional real estate agents and finally found a home after they were initially denied it.

“Yeah, we were turned down for the home. It turned out the contract from the previous buyer fell through, so they ended up calling and asking if we were still interested. We were living in an apartment at the time and we were considering renewing our lease,” Marico Cheeks said.

Both Bell and the Cheeks family say right now it can be a patient process, but continuing to push toward ownership will help you find your way home.

“If it’s not your time to have a home right now, God most likely has something better in store for you,” Marico Cheeks said.