The Spring-Summer market is underway and everywhere you read and watch, you’ll find comments about the real estate market, interest rate movement, shortages of homes for sale in certain areas and price ranges. People outside the real estate and mortgage industries may wonder what it all means – and if they don’t, they should. It’s so easy to draw a conclusion about how the market’s doing, whether or not it’s a good time to buy or sell, if mortgage interest rates are good and so on. The problem with that is, it’s virtually impossible to know whether or not that conclusion is true without information from a real estate and mortgage professional that was researched and prepared specifically for an individual or family. Here are some questions consumers should NEVER try to answer by reading the news or surfing the net alone:
- Can I afford and qualify for a home?
- Can I get enough money for my home to buy a different one?
- Are interest rates good or should I wait to see if they’ll go lower?
- Is it a good time to buy a home or are prices going to hold steady or go down?
These are just a few typical questions that should be verified with a review of your personal situation. Drawing the wrong conclusion based on general information or statistics can cause you to miss an opportunity. Don’t worry – you don’t have to “sign your life away” to get a professional, specific opinion. We at GCS Title work with many experienced professionals and can connect you with people who can answer your questions with no obligation or pressure. Let us know what questions are on your mind – we’re happy to help you get them answered. ~ Charlie
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
On the House
Charlie Lawson – GCS Title
Different aspects of the housing market are going in different directions. But the latest “ups and downs” are pretty favorable. RE/Max is out with its latest National Housing Report and it shows we’ve got a healthy market that’s really picking up:
- The U.S. housing market has gone 50 months without a drop in the median sales price
- Home sales jumped 33.4% from February to March – that’s also a 3.6% year-over-year increase
- Forty-four of the 53 metro areas included in the report experienced home price increases
More homes have sold, prices are holding steady and rising in most areas; we’re also finding that the time it takes a home to sell is decreasing:
- March marked the 36th consecutive month where time on market was fewer than 80 days
- The average days on market in March was 71 – down four days from February and seven days year-over-year
As we’re seeing a jump in market activity, we’re simultaneously seeing a crash in mortgage interest rates. We’ve got the lowest interest rates since May 2013 according to the Primary Mortgage Market Survey from guarantor Freddie Mac. This “crash” is a good thing for a lot of people! Lower rates will make it possible for more people to qualify for mortgages and can stimulate buying activity, allowing more homeowners to be able to move up, downsize or move on. One thing to be concerned about is low housing inventory in some housing areas and price ranges; however, your professional real estate and lending professionals can help you be prepared to compete for the home of your dreams in a fast-paced marketplace. Getting pre-approved for a mortgage (and talking to a lender even if you’re not quite ready to buy) and discussing your goals and preferences with a Realtor will help you navigate the market conditions and take advantage of interest rates that won’t last forever. ~Charlie
On the House
Charlie Lawson – GCS Title
Bank of America released its inaugural Homebuyer Insights Report and there was a stat that really jumped out at me: 35% of the people 18 or older surveyed who want to buy a home in the future say they plan to retire wherever they buy. Some of our parents – and probably a lot of our grandparents – lived in one home for most of their adult lives, but the last few decades have seen people buying, selling and moving every 3-7 years. Here are some of the other responses to the survey questions along with some important talking points that we as real estate professionals need to be sure consumers hear and understand:
32% of Millennials said they will wait to pay down debt before buying a home
We need to stress that paying off debt isn’t the only aspect of qualifying for a mortgage and how important it is to make an overall plan for debt, credit and payment-preparedness. “Waiting to pay down debt” doesn’t mean you’re qualified – there are more pieces to the puzzle.
66% of Millennials said they would likely need assistance from their parents to buy their first home
It’s important to include rules and parameters for gift money as well as highlight and publicize the various down payment assistance programs available in our state, cities and counties.
75% of first-time homebuyers said they would skip bypass a starter home in favor of something more desirable
Going from renter to homeowner is a big step for anyone, so making a larger leap from the starting block will require more strategic planning. Again, talking to a lender far in advance of when a consumer *thinks* they’ll be ready to buy is the best way to learn about and maximize opportunity.
My team and I are here to help our Realtor and Loan Officer partners communicate the current conditions and issues in our market as well as help spread the word about the incredible benefits of homeownership. Let’s talk!
Most people in California’s Bay Area don’t have the income necessary to afford homes there. The “U.S. Sustainable Home Price Report—Fourth Quarter-2015” from Fitch Ratings says that home prices in San Francisco are “unsupportable by area incomes.” The report mentions parts of Florida and Texas that have the same issue, though not as severely. While we certainly don’t have that problem here in Minnesota, there does seem to be a constant challenge with regard to what people know and *think* they know about qualifying for a mortgage and how owning versus renting benefits one’s overall financial picture.
It’s easy to see why the public may be suspicious of Realtors’ and Loan Officers’ motives when they tout the benefits of homeownership when following up on a lead – it’s human nature to conclude someone is just trying to sell you something and discount what they’re saying. That’s why we as industry professionals have to be talking about this every day to everyone. Questions that can start conversations and really reinforce the benefit of owning over renting are things like:
“Do you think it’s better to put money in the bank or spend and never see it again?”
“What if your biggest monthly cost also doubled as savings?”
We certainly hope homeownership doesn’t exceed people’s reach here in our neck of the woods or anywhere for that matter. Starting these dialogues with the public is never a bad idea – whether or not they have decided they are “in the market for a home.” Naturally, we’re always trying to build and increase business, but part of our job is sharing the understanding of how important the product we deal with (homes) is to the benefit of the clients – past, current or “eventual” – we serve.
The medical capitol of Rochester, Minnesota just got a little more distinguished: Rochester, MN has made it into livability.com’s “Top 10 Best Affordable Places to Live” list. I like this list because it mentions affordable places that people would actually want to live. But there’s plenty of good news to go around….
Turns out, Rochester, MN and the rest of the top ten aren’t the only affordable places to live. A report by a huge entity that has its own think tank (Black Knight Financial Services) that monitors, analyzes and studies all things mortgage and real estate-related released a report that says mortgage payment-to-income ratio is still favorable by historical standards, so it’s easier for many people to buy a home. Black Knight’s Senior Vice President of the Data & Analytics Division Ben Graboske explains it this way: “… it currently takes 21 percent of the median monthly household income to purchase the national median-priced home using a 30-year fixed rate mortgage. That’s down significantly from 33 percent back at the top of the market in 2006, and is still below the average of 26 percent we saw in the more stable years before the housing bubble.” For those of us who aren’t statistical geniuses, this report is saying that homeownership is affordable AND a sound choice. So many people (understandably) got scared by the real estate market crash and we in the real estate and lending industries need to be constant ambassadors (and cheerleaders according to this info!) for homeownership and its benefits. We can do this together! Let’s get this information out to all the people it can help!