Archives for February 2020

Buying a Home Early Can Significantly Increase Future Wealth

Two people opening boxes in a home — Happy young couple unpacking cardboard boxes at new home. They enjoying their time while moving into new apartment with their dog.

According to an Urban Institute study, homeowners who purchase a house before age 35 are better prepared for retirement at age 60.

The good news is, our younger generations are strong believers in homeownership.

According to a Freddie Mac survey,

“The dream of homeownership is alive and well within “Generation Z,” the demographic cohort following Millennials.
Our survey…finds that Gen Z views homeownership as an important goal. They estimate that they will attain this goal by the time they turn 30 years old, three years younger than the current median homebuying age (33).”

Graph of Generation Z that wants to own a home

If these aspiring homeowners purchase at an early age, the Urban Institute study shows the impact it can have.

Buying a Home Early Can Significantly Increase Future Wealth

Based on this data, those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-20s and early-30s had close to $50,000 left, but traditionally purchased more expensive homes.Although the vast majority of Gen Zers want to own a home and are somewhat confident in their future, “In terms of financial awareness, 65% of Gen Z respondents report that they are not confident in their knowledge of the mortgage process.”

Bottom Line

As the numbers show, you’re not alone. If you want to buy this year but you’re not sure where to start the process, let’s get together to help you understand the best steps to take from here.

If you’re interested in purchasing or selling a home you can start by Contacting Us directly or start searching for your new home here Anthem, Desert Hills, New River, Phoenix, Mesa, Scottsdale, Tempe, Glendale or Surprise.

Homes Are More Affordable Today, Not Less Affordable

There’s a current narrative that owning a home today is less affordable than it has been in the past. The reason some are making this claim is because house prices have substantially increased over the last several years.

It’s not, however, just the price of a home that matters.

Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by approximately 3% over the last year.

The National Association of Realtors (NAR) releases a monthly Housing Affordability Index. The latest index shows that home affordability is better today than at almost any point over the last 30 years. The index determines how affordable homes are based on the following:

“A Home Affordability Index value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).”

Housing Affordability Index 1990 to Today

The higher the index, therefore, the more affordable homes are. Here is a graph showing the index since 1990:Obviously, affordability was better during the housing crash when distressed properties – foreclosures and short sales – sold at major discounts (2009-2015). Outside of that period, however, homes are more affordable today than any other year since 1990, except for 2016.

The report on the index also includes a section that calculates the mortgage payment on a median priced home as a percentage of the median national income. Historically, that percentage is just above 21%. Here are the percentages since June of 2018:Again, we can see that affordability is much better today than the historical average and has been getting better over the last year and a half.

Bottom Line

Whether you’re thinking about buying your first home or moving up to the home of your dreams, don’t let the false narrative about affordability prevent you from moving forward. From an affordability standpoint, this is one of the best times to buy in the last 30 years. When the time comes, a reliable moving company like https://threemovers.com/bahrain-international-moving-companies/ can make your transition smoother.

Housing Inventory Vanishing: What Is the Impact on You?

House in a cart with a clock — Alarm clock, house model and shopping cart model, home buying moment concept

The real estate market is expected to do very well this year as mortgage rates remain at historic lows. One challenge to the housing industry is the lack of homes available for sale. Last week, move.com released a report showing that 2020 is beginning with the lowest available housing inventory in two years. The report explains:

“Last month saw the largest year-over-year decline of housing inventory in almost three years with a dramatic 12 percent decline, pushing the number of homes for sale in the U.S. to the lowest level since January 2018.”

Graph of Year Over Year Inventory Decline

The report also revealed that the decline in inventory stretches across all price points, as shown in the following graph:George Ratiu, Senior Economist at realtor.com, explains how this drop in available homes for sale comes at a time when more buyers are expected to enter the market:

“The market is struggling with a large housing undersupply just as 4.8 million millennials are reaching 30-years of age in 2020, a prime age for many to purchase their first home. The significant inventory drop…is a harbinger of the continuing imbalance expected to plague this year’s markets, as the number of homes for sale are poised to reach historically low levels.”

The question is: What does this mean to you?

If You’re a Buyer…

Be patient during your home search. It may take time to find a home you love. Once you do, however, be ready to move forward quickly. Get pre-approved for a mortgage, be ready to make a competitive offer from the start, and understand that a shortage in inventory could lead to the resurgence of bidding wars. Calculate just how far you’re willing to go to secure a home, if you truly love it.

If You’re a Seller…

Realize that, in some ways, you’re in the driver’s seat. When there’s a shortage of an item alongside a strong demand, the seller of that item is in a favorable position to negotiate. Whether it’s price, moving date, or necessary repairs—like plumbing, roof repair, boiler repair issues—you can request that potential buyers address these concerns. Additionally, having access to quick and efficient emergency plumbing help can be a major advantage, ensuring any plumbing issues are promptly resolved. This responsiveness can further increase buyer interest, especially when multiple parties are competing for the property.

Don’t be unreasonable, but understand you probably have the upper hand. Before you sell your house, gather more information and be sure that every home’s system is already in good shape. For example, if you still have plumbing issues, hiring a plumber is your best option.

Bottom Line

The housing market will remain strong throughout 2020. Understand what that means to you, whether you’re buying, selling, or doing both.

Where Homebuyers Are Heading By Generation [INFOGRAPHIC]

Some Highlights:

Whether capitalizing on job opportunities, affordability, or warm-weather places to retire, Americans are making moves to these top cities to take advantage of the strength in the current housing market.
A strong economy and lower mortgage rates have made it easier for many would-be buyers to get into the market. According to realtor.com, it just depends on which market.
To find the top market in our area, let’s get together.