We followed a Charlotte woman’s quest to buy a starter home. She’s on the verge of giving up.
Rochelle Vassar has specific parameters she’s been using in her search for her first home:
She wants three bedrooms and two baths and at least 1,300 square feet of space; she wants it to be reasonably updated; although it’s not a deal-breaker, she’d love a fenced-in backyard that her 1-1/2-year-old daughter Meadow can run around and play in; and — since she’s a single mom — she’d prefer to be near her older sister and her mother, who both live in north Charlotte.
More than anything else, however, what Rochelle wants is for Meadow’s childhood to have a sense of stability.
“If I have to keep renting, I don’t know if I’m gonna be able to stay here after the lease is up,” Rochelle says, as Meadow toddles around the two-bedroom Huntersville apartment that will cost her $1,447 a month until December but then likely will increase. “So where would I go next? Am I gonna be close to here? I really don’t know. ...
“And I don’t want to have to keep snatching her out of a daycare or a school if we have to keep moving. I don’t want to keep being in a situation where she makes friends, and then it’s like, ‘Yeah, you don’t go here no more.’”
That’s why, this spring, Rochelle set out to buy a small, single-family home or a townhouse that would allow them to establish real roots.
But after less than two months of looking, she’s already contemplating sticking with being a renter for the time being, in large part because of the other, much more limiting parameters defining her search: Even though her creditworthiness is excellent, she doesn’t have a ton of cash on hand; and while the top end of her budget might allow her to buy a place for as much as $315,000, her sweet spot is more like $280,000.
Just two years ago, she might not have had much trouble getting what she wants for that amount of money. Three years ago, she would have had practically none.
Today? Well, you probably know how insane things are in today’s real-estate market. What you might not know is what things are really like for people like Rochelle.
So, over the course of three weeks spanning April and May, The Charlotte Observer tracked Rochelle’s experience searching for a starter home, to better understand what it’s like for the multitude of first-time home buyers with a limited budget in today’s real-estate market.
The conclusion thus far? “It’s very discouraging,” she says, “especially as a first-time homebuyer.
“It’s not what I expected. At all.”
‘It just seems like it’s pointless’
Rochelle, a 27-year-old Charlotte native and North Carolina A&T graduate who works in the licensing department of an insurance company, honestly thought it was going to be easy.
She had almost no familiarity with sellers’ markets or buyers’ markets, about due diligence fees or earnest money deposits, how bidding wars worked or how corporate investors operated.
All she knew was that she had been pre-approved for a loan of up to $300,000. It didn’t take long for her to realize, however, that that meant she’d have to focus on homes priced at $260,000 or less, because she’d need plenty of wiggle room to be able to go over the asking price if she wanted any hope of making a competitive offer.
It also didn’t take long for her to realize she was in a very tricky spot.
According to Realtor.com, in April, the median listing home price in Charlotte was $400,000, which is 12% higher than it was a year earlier. On average, homes in Charlotte sold for 4.05% above the asking price last month.
When we met Rochelle, on April 20, she had looked at just three houses in person since hooking up with Julie Taché, a real estate agent her mom’s best friend had recommended, in March.
There certainly were other houses Rochelle had been interested in seeing. But if she flagged it for Taché, and if Taché said there were already offers on the house, and if those offers were higher than what Rochelle was willing to pay, then they’d agreed that there was no reason for them to go look at it.
For instance, Rochelle says, “there was this one townhome that just came on the market in the Davis Lake area. It started at $225,000, so I was like, ‘Well, that gives me a lot of room to go up.’
“But they weren’t letting people look at it. You had to put an offer on it sight-unseen. And I was told that they’re pretty much focusing on investors, ’cause investors will put offers on homes sight-unseen. So it was just like, ‘OK, never mind.’ I don’t want to put an offer out on a home I have never seen. Granted, I may not even get it. But what if I do, and then I go in and I’m like, ‘Whoa, no’? ... I just didn’t think that was a smart decision.”
As for the three houses she had gone to see in person:
The first was a three-bedroom townhouse off Mallard Creek Road. At 1,200 square feet, it was only 100 square feet larger than her current rented two-bedroom apartment, “so the bedrooms were really small, and I just felt like I was gonna be crammed.” It also was more of a fixer-upper than she wanted to take on.
She passed.
The second was also a three-bedroom townhouse, in a desirable part of the University area, and was 1,900 square feet and had a bonus room plus a deck off the kitchen and another off the basement. It too needed work, but “I was willing to put in work for that house, because it was just really nice.”
It was listed for $260,000. She offered $280,000. She didn’t get it.
The third one, meanwhile, was a double-wide manufactured home on a private acre that, on the inside, “was super-nice, updated, very trendy-looking ... like something you would see on HGTV.” It didn’t need any work. But the downsides were that she could touch the ceilings while standing on her toes, and that it was in Fort Mill, South Carolina, more than 30 minutes from her mom’s house.
At $289,000, it had generated a ton of interest. So much so that a big part of the reason she decided not to even try to put in an offer was that she felt certain she’d lose a bidding war.
On the day we met Rochelle, she summed up her first few weeks of shopping this way:
“It’s kind of fun. I mean, I like looking at houses. But like I said, it is discouraging. I feel like that would be the overall word of this entire process for me, is just: discouraging. And yeah, it should be exciting. But it feels like where I’m at is not good enough for what I want to do right now. So when I’m looking at (listings for houses) and then I see like the price, if it’s on the higher end, sometimes I don’t even click on them anymore. It just seems like it’s pointless.
“It seems like I probably don’t have a chance.”
‘I’m questioning whether I should just wait’
Rochelle knows it’s likely that a lot of the competition she’s getting crushed by is made up of investors.
And while it irks her, she also gets it.
“Like, as an investor, you’re doing it to have multiple streams of income to make money. I can’t really be mad at it. But it’s just very frustrating. Because I get why they’re doing it, but then it’s also, like, dang. ... And then as far as with sellers, they’re gonna see an all-cash offer and they’re gonna accept that because they don’t have to wait. They’re getting the cash up front. They’re getting everything. ...
“I mean, I have seen some sellers say, ‘No investors.’ Because they want to sell to people who actually are gonna stay there and live there. I just wish more would.”
But in the current real-estate market, buyers in low-leverage positions like Rochelle’s might not ever get a serious look even from sellers who refuse to accept offers from investors — as she found out a week after she first met with us.
On April 26, Rochelle went to look at a single-family home with a garage and a spacious master bathroom situated in a neighborhood full of well-kept houses that didn’t all look the same. It was in east Charlotte, but she was willing to sacrifice being a little farther from her family to get a house she could see herself and Meadow living comfortably in.
She also was encouraged by the fact that the seller was interested only in owner-occupants.
Still, the house was swarming with interested buyers, so Rochelle knew she needed to make a strong offer. She wound up stretching to the limits of her budget by bidding $315,000, which was $30,000 over the asking price. She also offered a $2,000 due diligence fee. (That’s the nonrefundable deposit that a buyer gives to a seller “to compensate the seller for the due diligence period, during which the buyer may decide whether to proceed with the transaction,” according to the N.C. Real Estate Commission.)
The seller’s agent responded with a request that Rochelle sign a clause in the contract saying she would pay $315,000 even if the house didn’t appraise for that amount. Rochelle declined to do so. The seller wound up not taking Rochelle’s offer.
Rochelle also was told that the person whose offer was accepted offered a “huge” due diligence fee.
After telling us about this experience, she adds:
“I’m starting to feel that these sellers are taking advantage of buyers and it’s making me feel even more discouraged than I was before. I’m questioning whether I should just wait until the market gets better because I can’t pay the huge diligence fees or come out of pocket thousands of dollars if a house doesn’t appraise.”
But with the market continuing its red-hot streak and now mortgage rates steadily climbing, too, one has to wonder: Will Rochelle be better off if she waits — or worse off?
‘You want to feel like it’s the right one’
Rochelle’s real-estate agent, Julie Taché, isn’t so sure.
“People keep saying, ‘Well, I’m gonna wait a few months, and see if things get better,’” Taché says, “I’m like, ‘A few months?’ There’s still zero inventory.”
In Rochelle’s case, she says, they’re searching in “a really tough price point.” On May 6, Taché emailed us to report that she was seeing only 30 listings in all of Charlotte for three-bedroom, two-bath single-family homes, condos or townhouses at or below $300,000. Obviously, not all of them are in Rochelle’s preferred part of town. She also has said she won’t consider condominiums.
“And the interest rates are making a difference,” Taché continues, “in that they’re just making it harder for people to buy. You get somebody like Rochelle or some of my other clients, we look for months to find a place, and when we finally get one, then they lock in a rate, it’s like, ‘Oh God. Really? That changed.’”
(According to Freddie Mac, mortgage rates hit a historic low in 2020, averaging just 3.11%. In early May, the average fixed rate on a 30-year mortgage reached 5.27%, the highest level in more than a decade.)
At the same time, that doesn’t mean Taché thinks Rochelle should rush into anything, or settle for something she’s not crazy about just so she can say she’s no longer a renter.
“Especially when it’s your first home, you want to feel like it’s the right one — like it’s your dream home,” Taché says.
“So it’s really tough to sort of say, ‘Welllllll —’” she sighs — “‘I guess this’ll do. This is good enough.’ As opposed to people in a higher price point who might be saying, ‘You know what? I looked at that one, it was good, but it wasn’t for me. Wasn’t quite there. So I’ll wait until I find something better.’”
The other twisted reality Rochelle faces is that in all likelihood, anything she buys won’t be as nice as the current apartment she’s renting, which — though only a two-bedroom — is fully updated, with a spacious laundry room and stainless-steel appliances.
A week and a half ago, we were with Rochelle and her daughter Meadow when Taché showed Rochelle two townhouses in north Charlotte, just south of West W.T. Harris Road near West Sugar Creek Road.
Neither made great impressions.
At the first, some of the vinyl siding was peeling away from the front of the home. The lock on the sliding door leading to the back patio was broken, the walls in the pantry were dirty, and the upstairs master bedroom looked like it could fit her king-size bed, but then almost nothing else. It was listed for $289,000.
At the second, water was seeping out of the ground near the base of the sidewalk. The handle to open the oven had been broken off, there was evidence of old water damage on the popcorn ceiling, and the fence around the tiny patio was missing its gate and was damaged in a couple of other places.
“So now we know why it’s $539 — er, $239,5,” Taché says, quickly correcting herself.
Then, she jokes, “$539 any day now. Have you seen that meme, where the people are standing outside with their real estate agent, and they say, ‘Well, maybe tomorrow we’d like to start looking at things that cost just a little bit more.’ And the agent says, ‘OK, come back later today, I’ll show you this one again.’”
Rochelle laughs. “Yup,” she says, “that’s exactly what it’s like.”
Where does she go from here?
She rules out the first place immediately. She says she’ll think about the second one, because even though it needs a whole lot of TLC, she feels like it has potential, and she seems encouraged by the prospect of the place not blowing her budget, of still having money left over for repairs and updates.
But a couple days later, Rochelle says she decided not to make an offer. It just didn’t feel right to her.
What does feel right to her, she says, is putting things on hold until she can call a credit union her mom’s best friend recommended to her, to inquire about getting a lower interest rate than the ones she’s been quoted by other banks.
A few days after that, when asked if she’s gotten a chance to try calling, she says, “Not yet” — and when she says it, there’s an air of defeat to it. She says she’ll reach out to the credit union “when I have time”; and that if she can get a better rate, she’ll keep looking at listings; and that if she sees a listing that piques her interest, she’ll go check it out.
In the meantime, she says, she’ll continue squirreling away money in her bank account.
In fact, when asked just minutes after looking at those two townhouses earlier this month if there’s anything she would do differently if she could do it all over again, Rochelle says, simply, this:
“I would have saved. I would have had more saved up.”
Then she scoops up Meadow, gives her a hug, packs her into her car, and starts driving her back to their apartment.
This story was originally published May 22, 2022 at 6:00 AM.
