Tuesday, April 30, 2019
Renters Paying Substantially More While Owning Costs Less
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? CoreLogicexplained:
“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 Index showed 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%
Bottom Line
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.”
Saturday, April 27, 2019
Friday, April 26, 2019
With Inventory Low: Will Your Dream Home Need Some TLC?
According to a new survey from Move.com, the wave of first-time homebuyers hitting the market this summer has resulted in an interesting statistic. Nearly 60% of buyers searching for a home this spring are willing to consider buying a fixer-upper, with 95% believing that the projects needed will increase their new home’s value!
Realtor.com’s Chief Economist, Danielle Hale, pointed to low-inventory at the entry-level price range for the increase in willingness to renovate.
“The combination of rising home prices and limited entry-level homes for sale is prompting many home shoppers to consider homes that need renovating.Replete with inspiration at their fingertips – like Pinterest, Instagram, and various home renovation TV shows – some home shoppers are comfortable tackling home renovation jobs to find a home that balances their needs with their budget.”
Just over half of all respondents who said they would be willing to buy a home in need of some TLC, would also spend more $20,000 to make the home fit their needs.
The most common ‘expected’ renovation is a kitchen remodel which can run anywhere from $22,000 for a minor remodel to $66,000 for a major remodel.
This isn’t a new trend by any means. According to the Joint Center for Housing Studies at Harvard University,home improvement project spending reached a new high in 2018.
“Americans spent $336.9 billion on remodeling projects, up 7.4% from the $313.6 billion a year earlier.”
Home renovation television shows have given many buyers hope that they could renovate a home they can afford into their dream home!
Bottom Line
If you are one of the many Americans considering buying a home this spring, meet with a local real estate professional who can help you find a house with the potential to be your dream home!
Home Buyer Demand Will Be Strong For Years To Come
There has been a lot written about millennials and their preference to live in city centers above their favorite pizza place. Some have even gone so far as to say that millennials are a “Renter-Generation”.
And while this might be true for some millennials, more and more research has surfaced that shows for the vast majority, owning a home is a major part of their American Dream!
New research shows that 66% of millennials who currently rent are determined to buy a home! Seventy-three percent of those surveyed by Pulsenomics plan to buy a home in the next five years, with 40% planning to do so within the next two years!
“Millennials want to own a home as much as prior generations,” Ali Wolf, Director of Economic Research at Meyers Research says. “We saw millennial shoppers scooping up homes in 2018—and 2019 will be no different.”
Bottom Line
Are you one of the millions of renters who are ready and willing to buy a home? Meet with a local real estate professional who can help determine your ability to buy now!
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