“Investors, many of whom can offer all cash, also are vying for the same homes, but with a big financial advantage.”
We’ve lived in the greater Newark area since 2008, when we fled the Bronx looking for a better school system and more space, and after 10+ years in a cozy three-bedroom apartment, moved into a rented 3(ish)BR house in the summer of 2019 on a two-year lease. Our plan was to get used to living in a house, understanding all of the nuances, and our next move would find us well-informed, in a home we owned, somewhere in the general area.
The pandemic threw a wrench into those plans, particularly with a hot market that saw houses selling within days of being listed, often well beyond their asking prices and, in some cases, even beyond their appraised value. As a family of five adults (including my mother-in-law, who would be staying with us frequently once we had enough space for her), we weren’t looking for a starter home, but most of what was in our price range in the town we were living in were starter homes, and we were regularly competing with NYers with deeper pockets. The fixer-upper starter homes investors were targeting were only slightly cheaper, and would be out of our range once they were quickly re-listed a few months later.
We finally found our dream house one town over, right across the border, which effectively kept us in our favorite neighborhood and saved us at least $100,000. The house we’d been renting ultimately sold for a little more than we paid for ours, despite being a quintessential starter home—literally half the size of our current home. That’s the difference a zip code and racial demographics can have on the “value” of real estate (and in reverse, on car insurance), a concept even more fraught than the astronomical valuations of unprofitable companies with little-to-no societal value.