A very official-sounding report called “Government Regulation in the Price of a New Home” released by the National Association of Home Builders (NAHB) that has some surprising info. It claims that government regulations and the cost of complying with them make up nearly one-fourth of the price of a new home. Think about that as you walk through the model on a new construction project or a house on the Parade of Homes! You can read about it yourself at https://www.nahb.org/en/news-and-publications/press-releases/2016/05/regulatory-costs-account-for-nearly-a-quarter-of-the-price-of-a-new-home.aspx .
Apparently, the costs associated with regulation have jumped 30% between 2011 and 2015 which coincides with the launch of the main agency and many new rules associated with the Dodd Frank reform bill. NAHB’s CEO Jerry Howard says “The cost of regulation in the price of a new home is rising more than twice as fast as the average American’s ability to pay for it. That is simply not sustainable.” Even though the rules and regulations that have been created for and imposed on real estate and mortgage transactions were mostly created by politicians, our “On the House” blog isn’t about politics. We’re here to share important and interesting news that affects consumers, mortgage loan officers and Realtors.
We at GCS Title think the takeaway is this: The NAHB report highlights how many regulations there are and we’re here to help consumers and our real estate and mortgage partners navigate the rules to successful closing. Our entire team is dedicated to making the process as easy and comfortable for everyone involved. Got questions? We’re here to help!
I guess you could say MN is physically in the middle of the country, but you might find it surprising to find that it’s in the same position with regard to median rents. Check this out: Nationally, the average rent for a one-bedroom apartment is $1140 and $1300 for a two-bedroom. We’re keeping right up here in Minnesota – the average price for a one-bedroom in the metro area is $1036 and $1438 for a two-bedroom. Year over year, rents are up 2.8% nationwide as of April. Isaac Newton’s famous quote “What goes up must come down” never seems to apply to things that require money coming from your pocket, so it’s doubtful rents will be headed in the opposite direction.
Price, market, interest rate fluctuations and compliance issues make it really hard to publish comparisons between monthly rent and payments on a home. But that shouldn’t stop those of us in the industry from having comparisons on hand between rent and mortgage payments that can be rattled off in conversation with our leads, prospects, strangers and anyone else we come in contact with. The fact that a home can be purchased for the same amount or less than rent often sparks “water cooler conversations” and a lot of questions that we and our Realtor and loan officer partners are happy to answer. Let’s get the buzz going!
On the House
Charlie Lawson – GCS Title
Recent figures from the government might be a bummer for home builders, but they’re keeping a stiff upper lip. There are so many numbers about what’s going on month-over-month and year-over-year, but there’s a couple of quotes from big brains in the industry that I think explain the fact that builder confidence hasn’t wavered much even though reports indicate their progress has hiccupped a little:
“We still expect strong housing demand and low inventory in the market for previously owned homes to lift single-family housing starts, later in the year.” – Genworth Mortgage Insurance Chief Economist Tian Liu
We mentioned tight inventory in some market areas and price ranges in last week’s blog, so Mr. Liu’s assessment seems right on and a good reason for home buyers to check out new construction. The next quote also touches on something we mentioned in last week’s blog – the fact that rates dropped to a three-year low:
“Solid job creation and low mortgage interest rates will sustain continued gains in the single-family housing market in the months ahead.” – National Association of Home Builders Chief Economist Robert Dietz
Whether you’re looking for a brand new home – or just a home that’s brand new to you – the same things are important: Planning and professional help. Anyone thinking of buying a home needs to get a personal consultation regardless of what your timeframe is. Competition for existing homes can be tough, so pre-approval for a mortgage and great representation will help you make the most of what’s available. We work with many experienced professionals and would be glad to refer you to someone who can help. We also have many builder partners, so let us know if we can help! ~Charlie
Are you getting ready to ring in the New Year? How are you feeling about the end of 2015 and the beginning of 2016? Here’s some good stuff from the U.S. Federal Reserve about how Americans are doing now compared to the peak of that thing called the “Great Recession” in 2009:
• Household net worth is currently $85,700, up from a recession low of $57,000
• Consumer debt has fallen to 9.8% from 13.2%
• Average credit score has risen from 687 to 695
People might not necessarily realize that from what they’re hearing in the news. On the real estate and mortgage side of things, we know that home appreciation is moving but not out of control, rates are still historically favorable and we had a lot of lending changes this year that can make it easier for some folks to qualify such as the return of 3% conventional financing and lower FHA MIP premiums. SO…however you feel like you did in 2015, know there is reason for optimism. Let’s spread the word together and help educate consumers so they can take advantage of this amazing time in history to buy in and really reap the benefits of homeownership. The takeaway?
Americans far from fizzled economically, so break out the bubbly and celebrate the gains of this year and possibilities for next!
Happy 2016! Be safe!