Tim Helton : September 10, 2018 5:19 pm : Real Estate
Here are four great reasons to consider buying a home today instead of waiting.
1. Prices Will Continue to Rise
CoreLogic’s latest Home Price Insights report reveals that home prices have appreciated by 6.2% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 5.1% over the next year.
Home values will continue to appreciate for years. Waiting no longer makes sense.
2. Mortgage Interest Rates Are Projected to Increase
Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have already increased by half of a percentage point, to around 4.5% in 2018. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison, projecting that rates will increase by half a percentage point to around 5.1% by this time next year.
An increase in rates will impact your monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.
3. Either Way, You Are Paying a Mortgage
There are some renters who have not yet purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.
As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to build equity in your home which you can then tap into later in life. As a renter, you guarantee your landlord is the person building that equity.
Are you ready to put your housing cost to work for you?
4. It’s Time to Move on with Your Life
The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.
But what if they weren’t? Would you wait?
Look at the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer, or you just want to have control over renovations, maybe now is the time to buy.
If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.
Tim Helton : September 6, 2018 5:41 pm : Real Estate
Home prices are at the top of everyone’s minds. Can they maintain their current pace of appreciation? Will rising mortgage rates negatively impact home values? Will the next economic slowdown cause prices to crash?
Let’s try to answer these questions based on what has happened in the past as well as what we know about the current real estate market.
The Impact of Rising Interest Rates
We explained earlier this year that rising mortgage rates have not negatively impacted home prices in the past and probably wouldn’t this time either. Freddie Mac’s comments were very direct:
“In the current housing market, the driving force behind the increase in prices is a low supply of both new and existing homes combined with historically low rates. As mortgage rates increase, the demand for home purchases will likely remain strong relative to the constrained supply and continue to put upward pressure on home prices.”
They were correct. So far this year, home values have continued to appreciate above normal historic percentages and it appears the gradual increase in rates has had little impact on prices.
The Impact of an Economic Slowdown
Many people fear that when the economy turns, we may see the same depreciation in home values as we did a decade ago.
However, we recently reported that the same group of economists, real estate experts, and investment & market strategists who predicted the next recession will occur in the next 18-24 months have also projected that house prices will continue to appreciate for the next five years, albeit at smaller percentages.
It Comes Down to Supply and Demand
As always, home prices will be determined by the demand to purchase compared to the available inventory of homes for sale. For the last six years, demand has far exceeded the available supply which has resulted in the average annual appreciation to top 6% since 2012. That is far greater than the historic norm of 3.6% annual appreciation that we saw prior to the housing boom.
There are currently small signs that housing inventory is slowly beginning to increase. Months supply of houses for sale matched last year’s numbers for the last two months after 37 consecutive months of decreasing inventory. New construction data has also shown positive signs that inventory will be increasing.
As inventory begins to meet demand, we will see appreciation return to more normal levels. We are already seeing projections coming in lower than the 6.2% annual average we have seen more recently.
CoreLogic is predicting that home values will appreciate by 5.1% over the next twelve months and the Home Price Expectation Survey calls for values to increase by 4.2% in 2019.
Mark Fleming, Chief Economist at First American, explained it best:
“We’re seeing the first indications that price appreciation may be slowing, but the underlying fundamental housing market conditions support a natural moderation of house prices rather than a sharp decline.”
Tim Helton : September 4, 2018 10:02 pm : Real Estate
There are many benefits to homeownership, but one of the top benefits is protecting yourself from rising rents by locking in your housing cost for the life of your mortgage.
Don’t Become Trapped
A recent article by Apartment List addressed rising rents by stating:
“Our national rent index is up 0.1 percent month-over-month, marking the sixth straight month of increasing rents. Year-over-year growth now stands at 1.2 percent.”
The article continues, explaining that:
“Rents increased month-over-month in 62 of the nation’s 100 largest cities, down significantly from the 85 cities that saw rents rise last month. That said, rents are still up year-over-year in most of the nation’s largest markets — 77 of the 100 largest cities have seen rents increase over the past twelve months.”
Additionally, Urban Land Magazine explained that,
“Currently, nearly half (47 percent) of renter households are cost burdened (i.e., paying more than 30 percent of income for housing), while 25 percent (totaling 11 million households) are severely cost burdened, paying over 50 percent of their total household income for rent.”
These households struggle to save for a rainy day and pay other bills, including groceries and healthcare.
It’s Cheaper to Buy Than Rent
As we have previously mentioned, the results of the latest Rent vs. Buy Report from Trulia show that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.
The updated numbers show that the range is an average of 2% less expensive in Honolulu (HI), all the way up to 48.9% less expensive in Detroit (MI), and 26.3% nationwide!
Know Your Options
Perhaps you have already saved enough to buy your first home. A nationwide survey of about 1,166 renters found that 34% said they rent because they cannot afford to buy, 29% said they cannot afford to buy where they live, and nearly a quarter (24%) were saving to buy.
Many first-time homebuyers who believe that they need a large down payment may be holding themselves back from their dream homes. As we have reported before, in many areas of the country, a first-time homebuyer can save for a 3% down payment in less than two years. You may have already saved enough!
Don’t get caught in the trap that so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Let’s get together to determine if you can qualify for a mortgage today!
Tim Helton : August 31, 2018 5:40 pm : Real Estate
- Hiring a real estate professional to help you buy your dream home or sell your current house is one of the most ‘educated’ decisions you can make!
- A real estate professional has the experience needed to help you through the entire process.
- Make sure that you hire someone who knows current market conditions and can simply and effectively explain them to you and your family!
Tim Helton : August 30, 2018 5:58 pm : Real Estate
The latest Existing Home Sales Report issued by the National Association of Realtors (NAR) revealed that home sales have decreased for four consecutive months and are at their slowest pace in over two years. This has some industry leaders puzzled considering the fact that the economy is strengthening, unemployment is down, and wages are beginning to rise. This begs the question: “Where are the buyers?”
Actually, agents in the field of most communities are still seeing strong desire from prospective purchasers. They have a list of potential buyers ready to go if the right houses come on the market and they claim it is not a shortage of demand, but is instead a shortage of inventory that is causing the market to soften.
Why is there a shortage of inventory?
You only need to look at the graph below to understand:
New construction sales over the last ten years are far below historic numbers from 1995-2002.
A recent industry report looked at building permits and concluded:
“If construction over the past decade matched historic norms, accounting for population change, the country would have had 2.3 million more single-family home permits.”
That decade of not building enough homes is the primary reason for the concerns about today’s market.
Wait, weren’t we talking about ‘existing’ home sales?
Some may argue that NAR’s sales report deals with existing home sales and not new construction, and they would be correct. However, reports have shown that one of the main reasons why existing homeowners are not selling is because they can’t find homes that meet the needs of their current lifestyles. Historically, the upgrades in a newly constructed home were the answers to those needs.
Over the last decade, however, there were fewer homes built to satisfy this move-up seller. Consequently, there are many homeowners who stayed in their homes for a longer tenure, instead of putting their homes up for sale.
As more new homes are being built, there will be more housing inventory to satisfy current demand which will cause prices to moderate and sales volumes to increase.
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