Coaching and teaching - many through the mortgage process and others on the field

Category: Housing Market (Page 1 of 21)

Homes Are More Affordable Now Than They Have Been in Years

The media is reporting that there is an affordability crisis and discouraging potential home buyers. Unfortunately, this narrative is completely wrong, as homes are more actually affordable now than they have been in some time.

As we all know, home prices are appreciating. When buyers hear that prices are going up, it’s normal to think a home will cost more as the trend continues.

The way the housing market is positioned today, however, low mortgage rates are actually making homes more affordable, even as prices rise.

Understanding Home Affordability

Understanding how affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down their optimal window of time to make a purchase.

There are three main factors that go into determining how affordable homes are for buyers:

  • Mortgage Rates
  • Mortgage Payments as a Percentage of Income
  • Home Prices

The National Association of Realtors (NAR), produces a Housing Affordability Index, which takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:

“…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

Why are homes so affordable today?

Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s home buying affordability is historically low mortgage rates. Based on this primary factor, we can see that it is more affordable to buy a home today than at any time in the last seven years.

If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home.

With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

If you’re thinking of making a move, now is a great time to take advantage of the affordability that comes with such low mortgage rates.

Whether you’re thinking of purchasing your first home or moving into a new one and securing a significantly lower mortgage rate than you may have on your current house, please do contact me so we can determine your next steps in the process.

To Buy or To Rent?

Deciding between buying or renting your next home?  It’s true that home values have gone up quite a bit, but so have rents.

In fact, the largest landlord in the US, Invitation homes, said that rents have gone up 14% since last year. 

And that’s not all – they forecast that rents will continue to go up about 6% annually

So, while it’s true that initially purchasing a home will be more expensive, your mortgage payment will remain relatively stable into the future.  Whereas your rental payments will likely rise significantly in the years to come.

There are other amazing benefits that come with buying a home, including pride of ownership, more freedom in renovating and design, and of course building equity. 

And because of increasing demand and tight supply, it looks as if home values will be well supported, and many are forecasting home prices to move higher.

I can give you a complete analysis with statistics for your specific zip code so you can make accurate comparisons and see which choice is best for you. Give me a call today to learn more.

More Housing Bubble Fears in the Media

clear and blue bubble near green leaves

Home prices have risen over 40% since 2006. This has prompted another round of media fearmongering that a housing bubble is imminent.

As you might have recognized, the media has been talking about a housing bubble for the past several years, only to see home prices continue to be well supported.

Is Today’s Market Like The Bubble of 15 Years Ago?

Comparing today’s housing market to the market in 2006 requires us to understand some key differences to help us see the full picture. Let’s break that down.

The majority of individuals who buy homes do so based upon monthly payment. Therefore, we must consider differences in mortgage interest rates, as well as differences in household income between the market in 2006 and today.

Mortgage rates in 2006 ran about 3% higher than interest rates that are available today. This helps make the monthly payment today much lower, even in some cases where the amount borrowed is higher.

Meanwhile, average hourly earnings have increased by 55% from 2006 to today, according to the Bureau of Labor Statistics.

Homes Are Actually MORE Affordable Today

Because of the rise in income, as well as the drop in interest rates, the cost to purchase a home today appears to be significantly more affordable than it was in 2006.

Additionally, today’s appreciation is due to record low home inventory levels and strong demographic demand, which wasn’t the case in 2006.

Don’t let the media scare you out of all the wonderful benefits of home ownership. Contact me today to find out more!

Choosing The Right Mortgage Loan Originator

Whether a borrower is making a home purchase or refinancing their current mortgage, choosing the right mortgage loan originator is critical to their success.

The right lender is a crucial part of the purchase process…but how do you know if the loan originator is an expert and understands your needs and financial situation?

In this article, we’ll go over several ways to identify how borrowers can identify a great home financing partner.

Purchasing a home is one of the most important transactions of our lives, so we need someone who can not only find a low interest rate, but understands the borrower’s financial situation and long-term goals.  The terms of the mortgage are going to impact the borrower’s household finances for years to come, so it’s important to find the right fit!

The right loan originator will help determine the mortgage program and term, as well as walk the borrower through that lengthy process.  Lenders should have experience in the local market and the type of transaction (primary residence, 2nd home, or investment property), as well.

Understanding the Local Market

It’s important that a borrower’s originator has knowledge of the community.  They should be able to offer personalized expertise and information unique to the area buyers are considering.

The lender should also have a good report with the borrower’s real estate agent and other real estate professionals.  This will give the buyer access to a resourceful network of inspectors, contractors, financial professionals, in their area.

With record-low mortgage rates and the increased demand for living space, coupled with the entrance of a large group of first-time home buyers, our market is expected to be tight for the foreseeable future.

Utilizing a local loan officer to help you navigate the home market, one who is focused on helping you make the best decisions for your financial situation and long-term goals, is crucial.

Access to a Variety of Mortgage Programs

There are always a number of factors that impact loan qualification – such as self-employment, student loan debt, and credit score, just to name a few. 

There truly is no one-size-fits-all mortgage, and you buyers should consider working with a loan originator that has access to multiple loan programs.

With that in mind, it’s critical that borrowers work with a local loan officer with access to a multitude of home loan programs that fit’s their scenario.  There are many types of loans out there, and it’s the lender’s responsibility to recommend the right product for the borrower’s needs.

A Trustworthy Lender

The borrower’s relationship with their loan officer shouldn’t end at closing. A reputable lender should be concerned with your overall purchase experience and ask for your feedback after the transaction.

The borrower should continue to rely on their lender as a resource for advice and expertise for all of their future real estate needs.

One way for a borrower to find out about the lender’s reputation is to check online reviews.  Both positive and negative ones should be readily available with a simple online search.  Check out Zillow or Social Survey to find out more about your chosen lender!

Long Term Perspective

Ultimately, the right originator should be a strong advocate and listener who will act in the borrower’s best interest throughout the process.

The right lender should ask many questions, be cooperative and willing to listen, plus really know the borrower’s financial situation and goals. Their communication must be top notch.

Purchasing a home might seem like a one-time thing, but that’s not the reality of purchasing real estate.  The right loan originator will be a partner for the long-term and shouldn’t take a one-time transactional approach.  It’s wiser to find a home financing partner for a lifetime.

It would be my pleasure to help any borrower for the long term! Please do reach out to me for more information or to discuss how I might be able to help.

UPDATE: New Home Sales and New Appreciation Numbers

New home sales, which measures signed contracts on new homes, were up 21% in March, and the February number was revised higher, as well.

Taking out the revision, sales would be up 32% from last month’s original number.

Sales are up 67% on a year over year basis, although that is a little bit skewed, due to the economy being shut down this time last year.

Looking at inventory levels – there were only 307,000 new homes for sale in March, down 7% from last year. There are 14% fewer homes for sale under $300,000 compared to last year. The Median home price was reported at $331,000 up not even 1% from last year.

Appreciation

Home prices continue to increase across the country, as the latest S&P CoreLogic Case-Shiller Home Price Index report showed a 12% annual gain in February — up from 11.2% in January.

Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate nationally.

It’s the ninth straight month of increasing prices.  The 12% home price gain is the highest recorded increase in the last 15 years!

Phoenix, San Diego, and Seattle reported the highest year-over-year home price gains among the 20 cities in February, with Phoenix leading the way with a 17.4% increase from 2020. San Diego showed a 17% increase, and Seattle showed a 15.4% increase.

“Some recent signs suggest that the historically tight inventory pressures may finally be starting to ease,” said Zillow Economist Matthew Speakman.

“Should those signs materialize, the meteoric rise in home prices may finally have a reason to come back down to earth. For now, red hot home price appreciation shows few signs of cooling.”

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