The #1 Misconception in the Homebuying Process
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This is consistently the top reason I hear from 1st Time Home Buyers and Equity Rich Home Owners why they are "waiting to make a decision". Its a costly mistake when you look at what other industry professionals are doing. Developers, Builders, Banks, Investor are all on the same side of this equation, housing prices will continue to be under pressure as turnover rates remain low, inventory levels remain low, interest rates remain low, new SFR starts continue to fall and the demand for housing continues to build up.
The Facts
After over a year of moderating home prices, it appears home value appreciation is about to reaccelerate. Skylar Olsen, Director of Economic Research at Zillow, explained in a recent article: “A year ago, a combination of a government shutdown, stock market slump and mortgage rate spike caused a long-anticipated inventory rise. That supposed boom turned out to be a short-lived mirage as buyers came back into the market and more than erased the inventory gains. As a natural reaction, the recent slowdown in home values looks like it's set to reverse back.”CoreLogic, in their January 2020 Market Pulse Report, agrees with Olsen, projecting home value appreciation in all fifty states this year. Here’s the breakdown:21 states appreciating 5% or more26 states appreciating between 3-5%Only 3 states appreciating less than 3%
The Misconception
Many believe when real estate values are increasing, owning a home becomes less affordable. That misconception is not necessarily true.In most cases, homes are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by almost a full percentage point since this time last year.Another major piece of the equation is a buyer’s income. The median family income has risen by 5% over the last year, contributing to the affordability factor.Black Knight, in their latest Mortgage Monitor, addressed this exact issue: “Despite the average home price increasing by nearly $13,000 from just over a year ago, the monthly mortgage payment required to buy that same home has actually dropped by 10% over that same span due to falling interest rates…Put another way, prospective homebuyers can now purchase a $48K more expensive home than a year ago while still paying the same in principal and interest, a 16% increase in buying power.”
The Bottom Line Still uncertain? Find out how you can enter into this Housing Market with less than 20% Down Payment or leverage your existing home's Equity to reap an even greater reward. Want to Learn How? Call today 949-324-2232 or https://www.jeffreyseyler.com/agents