What Is the Cost of Waiting Until Next Year to Buy?

What Is the Cost of Waiting Until Next Year to Buy? [INFOGRAPHIC]

 

Probably the biggest question a Millennial asks when contemplating making the leap into homeownership – should I buy now or later? If you are one of the many Millennials born between 1981 – 1997 seeing your friends and family diving into the real estate market, you are probably asking yourself the same question!  Here’s information that will show you what a difference a year can make! Click the image below to download the infographic.

What Is the Cost of Waiting Until Next Year to Buy?

Some Highlights:

  • The “cost of waiting to buy” is defined as the additional funds necessary to buy a home if prices and interest rates were to increase over a period of time.
  • Freddie Mac forecasts interest rates will rise to 3.8% by Q4 2020.
  • CoreLogic predicts home prices will appreciate by 5.4% over the next 12 months.
  • If you’re ready and willing to buy your dream home, now is a great time to buy.

Multigenerational Homes Are on the Rise

As loved ones start to get older, we start to wonder: how long will they be able to live alone? Will they need someone there to help them with daily life? There’s a reason to ask those questions now more than ever, as the average life expectancy in the U.S. is 78 years old! As a result, 41% of Americans in the market are searching for a home that can accommodate a multigenerational family.

The graph below shows the number of people by generation that purchased a multigenerational home because they will either be taking care of an aging parent or they just want to spend time together.

Of those buyers, 26% indicated they will be taking care of an aging parent, and 14% said they want to spend time with an aging parent. These numbers do not come as a surprise. According to Pew Research Center, 64 million Americans (20% of the population) lived in a multigenerational household in 2016 (Last numbers available).

An increasing number of studies affirm the benefits of being part of a multigenerational household. These benefits aren’t just for the grandchildren, but for the grandparents as well. According to these two resources:

The University of Oxford

“Children who are close to their grandparents have fewer emotional and behavioral problems and are better able to cope with traumatic life events, like a divorce or bullying at school”.

Boston College

“Researchers found that emotionally close ties between grandparents and adult grandchildren reduced depressive symptoms in both groups”.

This research gives helpful insight into why 41% of Americans are in the market to buy a multigenerational home.

Bottom Line

If you have a home that could accommodate a multigenerational family and are thinking about selling, now is the perfect time to put it on the market! The number of buyers looking for this type of home will only continue to increase.

Related article: Home Ownership is a Cornerstone to the American Dream

D-FW home price growth trailed the nation in the fourth quarter

D-FW home price growth trailed the nation in the fourth quarter

Dallas-Fort Worth home price gains were slightly below the nationwide average in the latest comparison.

D-FW home prices rose 3.6 percent in the fourth quarter of 2018 from a year earlier compared with a nationwide 4 percent increase, according to the National Association of Realtors.

While home appreciation across the country has cooled, more than a dozen U.S. metro areas the Realtors group tracked had double-digit gains in the final three months of 2018.

“Home prices continued to rise in the vast majority of markets but with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace,” Realtors’ chief economist Lawrence Yun said in the closely-watched report. “Housing affordability will be the key to sustained healthy growth in the housing market in the upcoming years.”

The largest fourth quarter home price gains were in Cumberland, MD (up 29 percent) and Boise, Idaho (up 14.3 percent.)

Home prices fell year-over-year in 14 metro areas, with the worst declines in Decatur, Ill. (-10.7 percent) and Elmira, N.Y. (-8.3 percent.)

Among Texas’ big cities, the largest price growth was in Austin where median single-family home prices were 5.9 percent higher than fourth quarter 2017. Austin also had the highest prices with a median of $310,400 at the end of 2018.

D-FW’s median home price of $254,900 is still just a bit below the nationwide $257,600 price, according to the Realtors.

Nationwide home sales by real estate agents fell 7.4 percent in the fourth quarter compared with a year earlier. The biggest drop was in the West where home sales were 13.9 percent below a year ago.

The slowdown in home sales and price increases in the second half of 2018 is continuing into early 2019.

The moderation in the U.S. home market comes after several years of booming sales and huge price gains.

Article by Steve Brown for the Dallas Morning News.

Related article: Buying a Home This Year? Here’s What to Watch.

 

 

 

Buying a Home Young is the Key to Building Wealth

Buying a Home Young is the Key to Building Wealth

Homeowners who purchase their homes before the age of 35 are better prepared for retirement at age 60, according to a new Urban Institute study. The organization surveyed adults who turned 60 or 61 between 2003 and 2015 for their data set.

“Today’s older adults became homeowners at a younger age than today’s young adults. Half the older adults in our sample bought their first house when they were between 25 and 34 years old, and 27 percent bought their first home before age 25.”

The full breakdown is in the chart below:

The study goes on to show the impact of purchasing a home at an early age. Those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-twenties and early-30s had close to $50,000 left, but traditionally had purchased more expensive homes.

Many housing experts are concerned that the homeownership rate amongst millennials, those 18-34, is much lower than previous generations in the same age range. The study results gave a great reason why this generation should consider buying instead of signing a renewal on their lease:

“As people age into retirement, they rely more heavily on their wealth rather than their income to support their lifestyles. Today’s young adults are failing to build housing wealth, the largest single source of wealth, at the same rate as previous generations.

While people make the choice to own or rent that suits them at a given point, maybe more young adults should take into account the long-term consequences of renting when homeownership is an option.”

Bottom Line

If you are one of the many young people debating whether buying a home this year is right for you, let’s get together to discuss your options!

 

Related article: Dispelling the Myth About Home Affordability

Is the Recent Dip in Interest Rates Here to Stay?

Is the Recent Dip in Interest Rates Here to Stay?

Interest rates for a 30-year fixed rate mortgage climbed consistently throughout 2018 until the middle of November. After that point, rates returned to levels that we saw in August to close out the year at 4.55%, according to Freddie Mac’s Primary Mortgage Market Survey.

After the first week of 2019, rates have continued their downward trend. As Freddie Mac’s Chief Economist Sam Khater notes, this is great news for homebuyers. He states,

“Mortgage rates declined to start the new year with the 30-year fixed-rate mortgage dipping to 4.51 percent. Low mortgage rates combined with decelerating home price growth should get prospective homebuyers excited to buy.”

In some areas of the country, the combination of rising interest rates and rising home prices had made some first-time buyers push pause on their home searches. But with more inventory coming to market, continued price growth, and interest rates slowing, this is a great time to get back in the market!

Will This Trend Continue?

According to the latest forecasts from Fannie Maethe Mortgage Bankers Associationand theNational Association of Realtors, mortgage rates will increase over the course of 2019, but not at the same pace they did in 2018. You can see the forecasts broken down by quarter below.

Bottom Line

Even a small increase (or decrease) in interest rates can impact your monthly housing cost. If buying a home in 2019 is on your short list of goals to achieve, let’s get together to find out if you are able to today.

 

Related Article: Where are interest rates headed in 2019?

Buying A Home This Year? Here’s What to Watch

Excited About Buying A Home This Year? Here’s What to Watch

As we kick off the new year, many families have made resolutions to enter the housing market in 2019. Whether you are thinking of finally ditching your landlord and buying your first home or selling your starter house to move into your forever home, there are two pieces of the real estate puzzle you need to watch carefully: interest rates & inventory.

Interest Rates

Mortgage interest rates had been on the rise for much of 2018, but they made a welcome reversal at the end of the year. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates climbed to 4.94% in November before falling to 4.62% for a 30-year fixed rate mortgage last week. Despite the recent drop, interest rates are projected to reach 5% in 2019.

The interest rate you secure when buying a home not only greatly impacts your monthly housing costs, but also impacts your purchasing power.

Purchasing power, simply put, is the amount of home you can afford to buy for the budget you have available to spend. As rates increase, the price of the house you can afford to buy will decrease if you plan to stay within a certain monthly housing budget.

The chart below shows the impact that rising interest rates would have if you planned to purchase a $400,000 home while keeping your principal and interest payments between $2,020-$2,050 a month.

With each quarter of a percent increase in interest rate, the value of the home you can afford decreases by 2.5% (in this example, $10,000).

Inventory

A ‘normal’ real estate market requires there to be a 6-month supply of homes for sale in order for prices to increase only with inflation. According to the National Association of Realtors (NAR), listing inventory is currently at a 3.9-month supply (still well below the 6-months needed), which has put upward pressure on home prices. Home prices have increased year-over-year for the last 81 straight months.

The inventory of homes for sale in the real estate market had been on a steady decline and experienced year-over-year drops for 36 straight months (from July 2015 to May 2018), but we are starting to see a shift in inventory over the last six months.

The chart below shows the change in housing supply over the last 12 months compared to the previous 12 months. As you can see, since June, inventory levels have started to increase as compared to the same time last year.

This is a trend to watch as we move further into the new year. If we continue to see an increase in homes for sale, we could start moving further away from a seller’s market and closer to a normal market.

Bottom Line

If you are planning to enter the housing market, either as a buyer or a seller, let’s get together to discuss the changes in mortgage interest rates and inventory and what they could mean for you.

 

Related Article: Where are interest rates headed in 2019?

This Month in Real Estate: July 2018

This Month In Real Estate : July 2018

The Indigo Skye Group is happy to bring you the Real Estate News update for July 2018. Each month we share on our blog and social media networks the latest information and market insights we have available. In this update you get a birds-eye view of home sales, home prices, inventory and the most popular mortgage types and rates.

Here are just a few of the national real estate numbers we’re tracking for you right now. Click to the image below to watch the video.

this month in real estate july 2018

HOME PRICES:

The median home price increased to $264,800 in May, which was up 2.7 percent from April and up 4.9 percent from May of last year. The median home price has increased by approximately $12,300 in the past year alone.

 

HOME SALES:

The National Association of REALTORS® reported home sales at a seasonally adjusted annual rate of approximately 5.43 million homes during the month of May. This was a decrease of 0.4 percent from April and a decrease of 3.0 percent from May of last year.

this month in real estate july 2018

 

HOME INVENTORY:

There was a 4.0-month supply of housing inventory in May, which was flat from April. The total number of available homes for sale has decreased by 4.8 percent compared to May of last year.

this month in real estate july 2018

 

MORTGAGE RATES:

this month in real estate july 2018

 

Related article: Why we are not heading toward a housing bubble….

Thanks for stopping by the Indigo Skye Group blog! Be sure to check the blog weekly for more informational and educational articles about real estate.

 

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