The number of U.S. homeowners is at a 50 year low, many more households have decided to rent a home instead of purchase their own home. Although the reasons for this decision vary, many might assume renting is a more cost effective choice than making the commitment to purchase a home.
However, in a study performed by Trulia which compared the monthly expenses associated with renting and owning a home, it found that renting can be 37.7 percent more expensive than owning a home. The study included monthly expenses such as mortgage payments, taxes, home owners insurance and the cost of upkeep and repairs. The major factor influencing the affordability of buying a home is, of course, the low mortgage rates that are still available to buyers.
Even the possibility of a Federal rate increase won’t have much effect on the affordability of homes. According to the article written by Kendall Baer, published by DSNews, “…Rates would need to increase drastically in order to push the rent vs. buy decision toward renting.” In fact, in many areas of the U.S., home prices are increasing and it is that rise in home prices that will truly impact housing affordability.
Nevertheless, a number U.S. real estate markets have reported rental expenses that fall significantly below the monthly expenses of owning a home. To find out in which areas of the U.S. it makes more sense to buy a home and in which areas, renting may be a more cost effective option, read the entire article.
Over the past fifteen years, the percentage of first-time home buyers that fell between the ages of 20 and 29 has increased from 17 percent to 28 percent of all buyers, according to TransUnion. Following the same trend, first-time home buyers between the ages of 20 and 39 increased 16 percent in that same 15 year span; ultimately, the age group made up 60 percent of all first-time home buyers by the end of 2015.
An article published by The M Report by Brian Honea indicated that TransUnion anticipates up to 17 million first-time home buyers will enter the real estate market over the next five years. With this influx of new homeowners comes positive economic news for both local economies as well as the mortgage lending industry.
Joe Mellman, VP and Mortgage Business leader for TransUnion, explained that first-time home buyers help to
improve the local economic activity as a result of increased construction and home improvement demand. Mellman also describes, from the perspective of mortgage lenders, “First-time home buyers are valuable prospects in the eyes of many mortgage lenders, as that time in a borrower’s life often corresponds to additional financial needs,”.
Read the entire article.
Photo Credit: Renaude Hatsedakis
Summer has come to an end, but it certainly doesn’t signify the end of home buying opportunities for the year. In fact, fall is a season that brings many positive home buying possibilities and benefits. In an article published by Realtor.com, Margaret Heidenry lists several reasons why this time of the year might be the perfect time for buyers to make their move on purchasing a home.
One significant reason to buy a home in autumn: home prices are lower. According to RealtyTrac’s analysis of home sales over the past 15 years, buyers in October have paid an average of 2.6 below market value. This compares to buyers making a purchase in April, who will pay an average of 1.2 percent above market value.
The article goes on to list other important advantages of shopping for a home this time of the year. For example, buyers will not be in competition with as many other home buyers as they would be during peak buying seasons. Additionally, those homes that are on the market in the fall are generally listed by sellers who are in a situation where they need to sell their home. This allows the buyer to leverage their buying power and allows for more significant negotiations. Among some of the other reasons listed in the article, buying in the fall also means less competition for your realtor’s attention and time, the same goes for mortgage brokers and real estate attorneys. As the article states, “You can take your time to ask all those questions you have about earnest money, due diligence, title transfers, and more without feeling like you’re horning in their busiest season to turn a buck.”
Read the article for additional information about the benefits of purchasing your home after the peak season.
Photo Credit: Sharon Mollerus
The real estate market is showing signs of improvement; as a result, more Americans may be entertaining the idea of purchasing a home for the first time or moving to a new area of the U.S. However, its wise to consider how much money you need to earn in order to afford a home in a specific city. A recent study released by HSH.com provides the details about 27 major U.S. cities and what salary is required in order to purchase a home there.
According to an article published by Realtor.com’s Catey Hill, the study “assumes the buyer has good to excellent credit (and thus would get a mortgage interest rate—depending on location—of around 4%), put down 20% and would be spending no more than 28% of income on principal and interest.” Even with a significant down payment and a low mortgage rate, one would need to earn an average salary of almost $58,000 per year to afford a home in Chicago, according to the study results.
Topping the list with a salary requirement of almost $148,000 a year, is San Fransiciso, CA. More affordable cities such as Cincinnati, Atlanta and Pittsburgh allow home buyers earning closer to $30,000 to purchase a home.
To find out about other U.S. cities and how much you would need to earn to purchase a home there, read the entire article.
The Chicago-land real estate market has made a notable recovery since the housing crash in 2007. However, a closer look at the types and price point of homes that are in demand among home buyers reveals that smaller, lower priced homes have made the most significant turnaround.
On the other hand, the large homes that popped up at an explosive rate in the early 2000s, which came to be known as “McMansions”, have not recovered at nearly the same rate. In fact, many of the home owners looking to sell their homes, once valued at $2.5 million, are preparing to take a $600,000 loss on their investment. Further, these homes are on the market an average of 155 days before receiving an offer.
According to an article published by the Chicago Tribune by Gail MarksJarvis, the allure of these homes has faded. Many Generation X home owners lost money on the homes they purchased before the housing market crashed and are not financially able to purchase homes in the luxury price range, or are hesitant to make such a large investment in real estate. These large suburban, family-oriented homes do not appeal to a significant portion of millennials or baby boomer home buyers either. To add, home buyers who are in the market for luxury properties prefer to purchase new homes with the most up-to-date decor and amenities.
To read more about the luxury home market in Chicago-land, read the entire article.
Photo Credit: Ray Sawhill
Early on in 2016, the average time to close on a home mortgage loan had risen to an average of 50 days. The delay was a direct result of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure rule which changed the type and complexity of loan information industry professionals had to pass on to borrowers. Within the next few months, however, the time to close worked its way back down to a 12 month low of only 44 days.
Yet, the this figure has begun creeping back up again. Ultimately, July 2016 Ellie Mae findings reported an average wait of 46 days. According to an article published in HousingWire.com by Ben Lane, “…is this year’s increase in days to close just the industry fully settling into the post-TRID world and finally finding some semblance of normalcy, or is it more concerning than that? Only time will tell.”
The article goes on to provide additional figures from the Ellie Mae report. For example, July 2016 closing rate for all loan rose to 71.6% and the 30-year mortgage rate reached its lowest since March 2015. For more details, read the entire article.
This summer is the perfect time to consider purchasing a home. An article published by RealtorMag details three reasons buyers should not delay a home purchase any longer.
To start, home prices are not expected to remain steady at current prices, let alone dip below current values. In fact, home values have been increasing over the past twelve months and are expected to appreciate over the next five years at a rate of at least 3.2 percent a year.
Furthermore, mortgage rates are still hovering close to the record low, last week averaging 3.41 percent for a 30-year fixed rate mortgage. However, it is predicted that these rates will rise soon. In fact, it is expected that mortgage rates will rise an entire percentage point by next summer.
As a result, households currently renting instead of owning should consider moving forward with a home purchase. As documented in a Harvard housing study, renting does not make financial sense for most households. Renters miss out on not only the tax breaks that come with home ownership, but instead of paying down on their own investment, they are helping landlords pay off their investment plus a rate of return.
Read the entire article.
Foreclosures on homes in many U.S. cities lead to investors purchasing these “distressed” homes at deeply discounted prices. Consequently, the value of the other homes in these cities declined as well.
However, some good news has been released about this sector of the real estate market. According to an article published in DSNews.com by Brian Honea, there has recently been a decline in the number of distressed homes for sale. More specifically, as of May 2016, the number of distressed homes for sale decreased by 4 percent over the year. The lower inventory of foreclosed, REO and short sale homes has helped increase the demand for homes and, subsequently, increased the home values in those areas.
Honea quotes CoreLogic Chief Economist Frank Nothaft, “Overall, the homes-for-sale inventory remains relatively lean, while demand to buy homes has increased because of an improving labor market, more optimistic levels of consumer confidence, and continuing low mortgage rates.”
To learn more, read the entire article.
Photo Credit: Taber Andrew Bain
For the first time in the past nine months, mortgages for home purchases have accounted for more than 60 percent of all closed loans. According to a report released by Ellie Mae, the rate of actually reached 62 percent in May.
Additionally, the rate of loans that closed improved to 70 percent. Specifically, the rate of home purchase loans that closed was 75 percent, with the rate of refinancing closes lagging slightly at 67 percent.
The report also notes that home buyers who are financing their home purchase have seen an average of 45 days to close their loan, which is an increase of one day from last month.
The article published by REALTORMag on June 16, 2016 provides data from the Ellie Mae Report, and also discusses the percentage of home borrowers with “high” credit scores, which exceeded 80 percent for conventional loans.
Read the entire article for these details.
According to an article published by the National Association of Realtors (NAR), the sale of existing homes nationwide has increased 6 percent since April 2015. Additionally, the median home price for existing homes is up 6.3 percent since last April. Although the total housing inventory is showing some upward movement, it is still lower than it was a year ago.
Lawrence Yun, NAR chief economist, indicated “The temporary relief from mortgage rates currently near three-year lows has helped preserve housing affordability this spring, but there’s growing concern a number of buyers will be unable to find homes at affordable prices if wages don’t rise and price growth doesn’t slow.”
The supply of entry and mid-priced homes is still low and the market for these homes will likely be the most competitive in the coming summer months. However, proposed changes to FHA condo rules could eliminate some of the obstacles that stifle condo sales. These changes would allow more first time home buyers an opportunity to purchase a condo and enter the real estate market.
For more information, read the entire article.
Photo Credit: Marcel Suliman