David Jaggers left his job in Columbus, Ohio, in January of 2021 for the Chicago area unconcerned about buying a new house.
Jaggers had moved five times in the previous 20 years while working his way up the ladder in the corrugated box industry.
He and his wife Shannon knew the drill well.
Sell your house, pack up your stuff and let the moving truck do its job. Then settle in after purchasing a house.
Jaggers landed a job as a General Manager at Hood Container, which is close to Midway Airport. His company leased an apartment for him for the first eight months there.
By then, Jaggers was aware of the surging prices, and that the housing supply was depleted.
Jaggers didn’t have any real sense of how hard it’d be to buy a house until he started looking. In fact, the market was so unforgiving and treacherous that he didn’t purchase one.
After getting rejected for the sixth time for a bid submitted over the asking price, Jaggers decided to build.
The Jaggers family moved into their new place last February after breaking ground on their five-bedroom, 3,200-square-feet house in November. The house cost $532,000, which was cheaper than some of the houses he bid on.
“I just got frustrated,” he said. “I ran out of time. I had to extend my lease for eight months. We had talked to three builders, and we just decided this was the best way to go.”
There are hundreds of stories like Jaggers’ across the country. The market doesn’t discriminate against price points, either.
Ericiona and Monte Gates of Hobart started looking for a house in the $200,000 range in July of 2020, which was three months into the pandemic but at the beginning of the seller’s market.
The Gateses made bids on six or seven houses in Valparaiso, Crown Point, Hobart and Portage, they said, before they turned to Plan B. Plan B was buying Monte’s childhood home from his mother in Hobart.
As first-time home buyers, Monte and Ericiona were overwhelmed by the process. Their initial bid was on a house in Crown Point.
“We were excited,” she said “We were also super naive about the process. We just assumed that it was going to be accepted.”
They were beat on that house by a cash offer from a buyer who waived the inspection. Their most crushing day came when they put an offer in on a house in Portage. One of the house owners wanted to accept the offer but when she called her husband, he said don’t take it.
The Gateses were using Federal Housing Authority (FHA) financing.
An FHA loan requires more scrutiny and paperwork than a conventional loan. The couple took a similar offer using a conventional loan.
“That was the one that was really frustrating, ” Monte said. “The other realtor had communicated to our realtor that they were going to accept our offer.”
Said Ericiona: “We were right in the middle of celebrating and it was ripped from us.”
Their story has a happy ending. Monte’s mother was building a house in St. John. She ended up selling her Hobart house to them for a little below the market value.
Monte said the learning curve was tough. They went from putting in a bid for the asking price to starting with bids that were $10,000 over the asking price. He said using an FHA loan put them at a disadvantage.
“Making an offer for the asking price was considered lowballing it,” Monte said. “People were coming from Illinois and starting with bids that were $20,000 over the asking price and then waving inspections.”
Ericiona said the timing worked out great for getting their Hobart house.
“It was perfect for us,” Ericiona said. “When we started looking, she wasn’t ready to move yet. This wasn’t an option for us. It just happened to come up as we were looking for a house.”
For the Jaggers, resources weren’t the problem.
It was getting a seat at the table. He said he and Shannon toured about 200 houses. They were looking in St. John, Crown Point, and Schererville in Indiana, and Plainfield, Aurora, and Naperville in Illinois.
He was starting with bids of at least $20,000 over the asking price. Jaggers went up to $40,000 over the listed price for a house he liked in Plainfield.
He would sometimes drop what he was doing to run over and look at a house that just came on the market.
The process was always the same.
Jaggers would bid on a house a day or so after it was listed. The buyers would have a deadline for bids.
And then it was over.
He never heard back about any of his bids.
“I never got to negotiate, ” he said. “I never got to say, ‘Hey, I’ll go more.’ I think someone would come in and say they’d pay $25,000 over the final bid.”
The good news is that a market skewed toward sellers is starting to tilt toward normal equilibrium
According to the Greater Northwest Indiana Association of Realtors (GNIAR), there were 970 single-family homes sold in June, which was 13% less than June of 2021. Additionally, the inventory supply is currently 40 days, according to the GNIAR.
Chuck Vander Stelt, a local realtor, said that 60 days of inventory is a neutral market, meaning it favors neither the seller nor buyer. A year ago, the inventory supply was 21 days. The jump in prices from June of 2021 to 2022 was 7%, but it was 23% from March of 2021 to March of 2022.
Vander Stelt called trying to sell a home last summer a “circus” that lasted usually 72 hours.
“It was agents trying to get the buyer into the house and then get that written offer in,” he said. ”And then agents sifting through five, 10 and 15 offers. I’m sure there were sellers out there that had 20 or 25 offers.”
Jason Utesch, a Valparaiso realtor, said the market is unusual now. One of his clients bought a house for 8% under the asking price and the offer was contingent upon the sale of their house, while two other clients were stuck in bidding wars — making it not at all like last year.
“It’s unpredictable,” he said. “The marginal homes are struggling a little bit.”
Rising mortgage rates and inflationary pressure have slowed the buying frenzy down. Interest rates for a 30-year conventional mortgage are around 6%, which is about double what it was a year ago.
For the Jaggerses, it eventually worked out well after they got through some anxiety-induced moments. They hired a custom builder who didn’t do custom building at the time. The builder was too busy, so they streamlined options. Getting it done in four months was key.
“We were lucky to get what we got but it was crazy,” Jaggers said.
Mike Hutton is a freelance columnist for the Post-Tribune.