In a recent Insights Blog, CoreLogic reported that rent prices have skyrocketed since 2005. Meanwhile, the typical mortgage payment has actually decreased.
“CoreLogic’s national rent index was up 36% in December 2018 compared with December 2005, while the typical mortgage payment was down 4% over that period.”
Why the difference between the costs of renting versus owning?
It makes sense that rents have risen. However, how did mortgage payments decrease? CoreLogic explained:
“It’s mainly because mortgage rates back in December 2005 were significantly higher, averaging 6.3% for a fixed-rate 30-year loan, compared with 4.6% in December 2018.
The national median sale price in December 2005 – $190,000 – was lower than the $220,305 median in December 2018, but because of higher mortgage rates in 2005 the typical monthly mortgage payment was slightly higher back then – $941 – compared with $904 in December 2018.”
Additionally, a recent report by the National Association of Realtors (NAR) showed that purchasing a home requires less of your monthly paycheck.
According to the Economists’ Outlook Blog, NAR’s February 2019 Housing Affordability Indexshowed that the “percentage of income needed” to pay the typical mortgage has decreased the last three months.
November – 17.3%
December – 16.9%
January – 16.2%
February – 15.9%
What does this all mean to the current housing market? We think First American said it best in a post last week:
“The mortgage rate-driven affordability surge has arrived just in time… Rising affordability has already benefited home buyers and, if the lower rate environment persists, we’re in for a great spring home-buying season.”
With home prices on the rise and buyer demand still strong, some sellers may be tempted to try to sell their homes on their own rather than using the services of a real estate professional.
Real estate agents are trained and experienced in negotiation while, in most cases, the seller is not. Sellers must realize that their ability to negotiate will determine whether or not they get the best deal for themselves and their families.
Here is a list of just some of the people with whom the seller must be prepared to negotiate if they decide to For Sale by Owner (FSBO):
The buyer, who wants the best deal possible
The buyer’s agent, who solely represents the best interests of the buyer
The buyer’s attorney (in some parts of the country)
The home inspection companies, which work for the buyer and will almost always find some problems with the house
The termite company, if there are challenges
The buyer’s lender, if the structure of the mortgage requires the sellers’ participation
The appraiser, if there is a question of value
The title company, if there are challenges with certificates of occupancy (CO) or other permits
The town or municipality, if you need to get the CO permits mentioned above
The buyer’s buyer, in case there are challenges with the house your buyer is selling
The percentage of sellers who have hired real estate agents to sell their homes has increased steadily over the last 20 years. Let’s get together to discuss all that we can do to make the process of selling your house easier for you.
Saving for a down payment is often the biggest hurdle for a first-time homebuyer. Depending on where you live, median income, median rents, and home prices all vary. So, we set out to find out how long it would take to save for a down payment in each state.
Using data from HUD, Census and Apartment List, we determined how long it would take, nationwide, for a first-time buyer to save enough money for a down payment on their dream home. There is a long-standing ‘rule’ that a household should not pay more than 28% of their income on their monthly housing expense.
By determining the percentage of income spent renting in each state, and the amount needed for a 10% down payment, we were able to establish how long (in years) it would take for an average resident to save enough money to buy a home of their own.
According to the data, residents in Kansas can save for a down payment the quickest, doing so in just over 1 year (1.12). Below is a map that was created using the data for each state:
What if you only needed to save 3%?
What if you were able to take advantage of one of Freddie Mac’s or Fannie Mae’s 3%-down programs? Suddenly, saving for a down payment no longer takes 2 to 5 years, but becomes possible in less than a year in most states, as shown on the map below.
Whether you have just begun to save for a down payment or have been saving for years, you may be closer to your dream home than you think! Let’s get together to help you evaluate your ability to buy today.