Posts Tagged ‘atlanta housing market’

Generation Z is Preparing to Buy Homes

December 13, 2018

A recent study by realtor.com shows that Generation Z (ages 18 – 24) members show their strong home ownership desire because they prepare financially for a home purchase.  The study reports that Gen Z-ers are twice as likely as the previous generations to be saving or plan to be saving for a home purchase by age 25.   The study also noted that 40% of Gen Z-ers plan to become home owners by age 25.  These young people desire to buy homes at rates similar to Millennials and Gen X-er’s, but Gen Z-er’s have started saving sooner than prior generations.

The study shows that 79 percent are certain that they want to own a home, a level similar to the preceding generations.  Only 4 percent of this young generation say they do not want to buy a home.  The striking difference lies in the fact that, by age twenty-five, 74 percent have either started saving or plan to start saving for a home purchase.  Only 33 percent of the prior generations matched this saving discipline.  Some economists speculate that their graduating into one of the best labor markets in decades has given Gen Z-er’s a savings boost.

Other interesting details reported include:

  • Gen Z shows the least home-buying desire for investment or tax savings purposes (29 percent and 16 percent, respectively).
  • The top two reason for Gen Z home purchases are:
    • Customizing their own living space at 61 percent.
    • Raising a family in a home they own at 55 percent.

Great loan programs exist that can help young home buyers (older buyers, too) buy houses for as little as 3 percent down, and with interest rate and mortgage insurance discounts.  And military veterans can obtain VA loans with no down payment.  So young buyers who have started saving may be able to buy a home sooner than they think.

Do you know a young professional who talks about buying a home – perhaps a coworker or a niece or nephew?  Or has a friend with an adult child mentioned their kid’s home buying plans?  If so, please refer them to me.  If they are ready to buy now, we at Dunwoody Mortgage will get them into a home with a great loan that fits their needs.  If they are not ready to buy right now, we will coach them and help them to best prepare for their home purchase.  We love working with young (and older) home buyers.


Advertisements

Rents on the rise

December 11, 2018

Rents are still going up and just hit an all-time high, again. The U.S. Census Bureau reported that during the third quarter, the nationwide median asking rent topped $1,000 for the first time ever. According to the Census data, the median asking rent during the third quarter was $1,003, an increase of $52 over the second quarter and an increase of $91 over the same time period last year. That’s an increase of nearly 10% in just one year, when rents checked in at $912.

The increase has been dramatic over the last few years. Just three years ago, the asking rent was a full $200 less per month than it is right now.

Since we are a Georgia based company, I try and bring these topics back to the local area.

  • The Bad News: Rents are going up in Georgia.
  • The Not as Great News: So are home prices for buying.
  • The Good News: Metro Atlanta is a city where it is cheaper to own that rent.

A recent study by Trulia has Atlanta around the 60th cheapest metro area to rent (out of the top 100), and in the top 40 for cheapest metro area to own. While rents are going up, by living in the metro Atlanta area, you have the opportunity to own a home, build equity, and have your monthly housing payment go toward your financial goals (instead of your landlord’s).

Now here is the question – should I buy a home? To answer that question, ask yourself how long you plan to be in the home? Atlanta is a transient town, so maybe your time here is only for a year or two. In that case, renting could be the better option. If you plan to stay in a home for 3 years or more, that same Trulia article mentioned earlier says it is cheaper to buy than rent. Three years seems to be a good number for judging whether or not to consider buying a home or continuing to rent.

So… how long do you plan to stay in the home?

If you are looking to buy in the state of Georgia, contact me today! I can help get you prequalified for the home purchase. More importantly, we can discuss how much home you should buy versus how much home you qualify to buy. Often the amount one can qualify isn’t the amount one wants to pay each month as a mortgage payment. We’ll tackle those topics and more!

Cash Out Refi or HELOC – Key Questions

October 25, 2018


 

 

In the last post we covered the fact that American households have over $6 trillion of accessible home equity and described the two main ways home owners can access that equity – a cash out mortgage refinance and a home equity line of credit (HELOC).  I promised to make my recommendations on which option is best for a home owner, based on a set of questions.  You will find my recommendations below:

Question #1:  Do I want a fixed payment, or can I live with changing interest rates and payments?  Recent economic conditions show rising interest rates.   HELOC accounts typically carry a variable interest rate that increases as market interest rates increase and decrease as the market decreases.  Borrowers obtaining a cash out mortgage refinance often secure fixed rate mortgages, so the payments do not change over time.  Which do you prefer?

Question #2:  Am I disciplined to proactively pay down my loan over time, or will I only make minimum payments?  HELOC accounts typically require interest-only payments.  If you only plan to make the minimum payments, you may be surprised in a few years when your HELOC account matures and the bank expects you to pay off the remaining account balance.  If you will proactively pay down the balance, you will not have this surprise.  Refi mortgage payments fully amortize over the loan term, so your monthly payment always includes a principal component.  And when you make the last payment, your original loan balance will be fully repaid.  Which option is best for you?

Question #3:  How much money do I need, $100,000 for a home renovation or $10,000 for a home repair?  In short, if you do make extra principle payments, how long will it take you to repay the loan balance?  The lower the amount and the faster you repay it, the less likely increasing interest rates will burst your budget.  If you need a renovation amount of cash, selecting the long-term fixed mortgage rate may be a better option since it provides a fixed payment over a long time period.

Question #4:  Why do I need access to my home’s equity?  In my opinion, home renovations, repairs, and debt consolidations serve as good reasons to tap home equity.  These are steps that ultimately increase your equity or improve your overall financial position.  To me, that’s a wise use of your home equity.  On the other hand, tapping home equity for expendable items or vacations may not be the best use of a home’s equity.

Do you have a friend pondering whether to access their home’s equity?  Please refer them to me.  I will ask them these questions (and more) and coach them to make the best decision for their own unique circumstances.

The end of the seller’s market

October 2, 2018

I know it seems we are stuck in a seller’s market. It feels like an eternity at this point! I’ll be back to that theme in a moment, but right now… If you have been putting off buying a home because of fierce competition, now is a good time to look at the market again. Homes are staying on the market longer now than they have all year. There are fewer buyers out looking to purchase a home. This is the best opportunity for buyers so far in 2018!

Regarding 2018 as a whole though, and back to the theme of this post, there are too few homes on the market for the number of buyers wanting to own a home. Sellers tend to receive multiple offers, and can be picky when it comes to whom they choose to sell their home. According to a recent study by Zillow, the market will balance out in the near future.

Zillow’s study says there are signs that the inventory levels are beginning to get better (as I mentioned above), but the country is still dealing with the fallout of limited new construction over several years during the Great Recession. Expect to see conditions continue improving over the next year, and around 2020, Zillow expects the market to become a buyer’s market again. By then, Zillow expects new construction will have caught up to demand. As people move from their existing homes into the new construction, it will put more homes on the market for other people to buy/enter the home ownership market.

It is coming… not as quick as we may like it, but a more balanced market is on its way. In the meantime:

  • Remember there are a lot of myths out there when it comes to buying a home. For example, you do NOT need 20% down to purchase a home. For more on this, check out my previous post.
  • There are things buyers can do to make their offers more competitive. For more on this, check out Rodney Shaffer’s recent post.

Better days are coming, but that doesn’t mean you have to wait another year. If you are buying in the state of Georgia, contact me today. I can help you get prequalified to purchase your home, and we can discuss the variety of options to make your offer more competitive in this market.

 

Atlanta Home Market Update

September 26, 2018


A new report on the Atlanta housing market shows a significant decline in home sales, year over year, along with a much greater decline in Atlanta home sales as compared to the national housing market.  The number of August Atlanta home sales declined 7.1% from 2017 to 2018.  The national decline in home sales was only 1.1% for the same period.  The data shows varying results for different parts of the metro area:

  • Cobb County sales declined 9%
  • DeKalb County sales declined 8%
  • Clayton sales declined 17%
  • Gwinnett County reported a more than 10% sales decline
  • On the other hand, Fulton County sales increased 14%

Atlanta home prices continue to increase, even while the number of sales decrease.  One example of this is the Old Fourth Ward section of Atlanta.  From 2017 to 2018, the number of home sales declined 19%.  But at the same time, average prices in the Old Fourth Ward have risen by about 35%.

Atlanta’s housing challenge is an inventory shortage, especially at the lower end of the home price spectrum.  ReMax reported that the supply of homes listed for sale in metro Atlanta was down 13% in August as compared to August 2017.  Ultimately, buyers compete against each other for desirable homes and this forces prices up.

From my experience, it seems that homes priced under $300,000 have seen strong competition this year.  One client found a home priced around $260,000 in an attractive Gwinnett neighborhood.  My client’s offer was one of about 20 offers on this one house.  Some Realtor friends have told me about making offers on Atlanta condos where the listing agent received 12 – 15 other offers.

It is very tough for buyers to compete in this market.  I have several clients who have decided to put home ownership on hold until 2019.  It takes patience and persistence to keep going.

For pointers on how a lender can help a buyer compete, see this prior Mortgage Blog post:  https://wp.me/p1Gub-YJ.  Buyers should talk with Realtors about other ways to make their offers more attractive.  Effective ideas include:

  1. If cash is available, the buyer can offer to pay the purchase price regardless of the property’s appraised value.
  2. The buyer must have a flexible schedule to visit homes and make offers right when they hit the market.
  3. The buyer can consider writing a personal note to the seller explaining why the house is perfect.  (I’ve seen this work before.)

Experienced Realtors can offer more effective tips for winning the contract.  If you have a friend or coworker wanting to buy a home in Atlanta, ask if they want their lender to help them beyond financing a house by helping win the contract.  Then refer them to me.  We at Dunwoody Mortgage will do all in our power to help them win the contract and close on the purchase, and we will do it quickly too.


Credit scores on the rise

September 11, 2018

Some consumers credit scores are going up! A recent overhaul in the way the major credit bureaus factor in negative credit information is prompting millions of consumers’ credit scores to rise. The main reason? The removal of some collection items.

Over the past 12 months, collection items were removed from eight million consumers’ credit reports. The NY Federal Reserve said consumers who had at least one collection item/account removed from their credit reports saw on average an 11-point increase to their scores. Why the change in collection items being part of the credit score? Some collection categories often have mistakes/errors that lower potential buyers credit scores and keep them out of the borrowing market.

The three main bureaus (Equifax, Experian PLC, and TransUnion) all agreed to rework credit reports reports stemming from a 2015 settlement. In the settlement, some of the collection items removed were non-loan related items such as gym memberships, library fines, traffic tickets, and some instances of medical debt. This change would not include credit cards or loan related accounts. Those type of accounts that enter into a collection category will still negatively impact a potential home buyer’s credit score. any firms agreed to remove some non-loan related items that were sent to collection firms, such as gym memberships, library fines, and traffic tickets. They also agreed to strike medical-debt collections that have been paid by a patient’s insurance company. According to an article in the Wall Street Journal, those seeing the biggest boost to their credit scores are those with a score in the mid 600s.

This is a great move by the credit bureaus. Sometimes it is easier to prove that one owes money with the account in good standing, and harder to prove one no longer owes a debt. Some debts such as tax liens, credit card collections, back taxes, car/student loans in default, etc. are easier to prove the debt is actually in arrears. Arguing about a library account in a city one may have lived in 5 years ago becomes troubling and difficult to prove. While these accounts aren’t being removed from a credit report/history, they are being ignored when it comes to producing the credit score.

How the Lender Can Help Win the Contract

August 14, 2018


The last post covered reasons why we have such a sellers’ market in Atlanta real estate.  Now let’s cover how a lender can help win a contract.  We lenders have a few ways to help strengthen our buyers’ offers relative to competitors.

Firstly, many listing agents prefer to work with local lenders rather than the national and online lenders.  The Realtors also like the ability to communicate with local lenders – they can call us with any issues or questions and often get a faster response than with a national lender.  I once had a Realtor who was listing a home tell me, “We chose your client’s offer because they had a letter from you, and we know that you would make the closing happen on time.”  Trust is important and we local lenders work hard to build that trust in our markets.

Secondly, when my clients make an offer, sometimes the listing agent will call me to verify the information provided in the prequalification letter.  I’m always happy to talk with the agents, and I use this as a chance to actively promote my client’s strengths.  I once took a call from a Realtor on the Saturday of a holiday weekend.  When I answered she immediately responded, “Oh thank goodness!  A lender who works Realtor hours not bankers hours.”  We can be available on weekends and in the evenings to help our buyers.  I have volunteered to proactively call listing agents on my client’s behalf.  It helps to promote my client’s strengths.

The most powerful way a lender can help a buyer win a contract is to underwrite the buyer with a “to be determined” property — before the buyer actually makes an offer.  We fully underwrite the buyer, but without the property-specific details.  So there’s no appraisal, no title work, etc. (until a house is under contract).  This gives the ability to provide a letter stating that underwriting has already approved the borrower.  It also allows us to shorten the closing timeframe (since we don’t have to underwrite the buyer again) and potentially eliminate the financing contingency, which is standard on most home purchase contracts.  Having underwriting approval positions the buyer strongly relative to other offers with only prequalification letters.  The only offer stronger is a cash offer.  In competitive markets expecting multiple offers on listed homes, this approach can position the buyer to better win.

If you have a friend or family member who has been making home purchase offers and is frustrated about not winning, have them contact me.  We at Dunwoody Mortgage will do everything possible (from a lender perspective) to help them win.

 

A Seller’s Market – Thoughts on Why

July 26, 2018


The seller’s market continues on in the Atlanta area.  I have recently heard Realtors talking about their clients making offers on homes that have 12 – 15 competing offers.  One Realtor friend told me about a home that he listed last December.  The Realtor did painstaking research on the neighborhood and comparable properties.  The analysis said a fair price was $299,000.  The winning offer was $355,000!  That’s about 18% over the asking price.

So how did we get to this point?  According to a recent Wall Street Journal article, one key factor is that for over 10 years now, home construction has not kept pace with US population growth.  The article stated that current home construction per household is close to its lowest level in 60 years – since the late 1950’s.  In years past, this lower construction level was somewhat offset by the number of foreclosed homes available for purchase.  But that is no longer the case as foreclosure rates have decreased dramatically since the Great Recession.

In the Atlanta metro area, this housing “shortage” is compounded by population growth.  The Atlanta Journal Constitution reported in June that the metro area’s recent annual population growth of 1.5% exceeds the rates for eight of the top ten US metro areas.  With this growth rate, Atlanta is on pace to surpass the population of Philadelphia by 2022, becoming the eight most populous city in the country.

See the source image

All of this affects the mentality of a big group of potential home buyers.  They currently own a home, and they want to move to meet the needs of a growing family or shorten their commute.  But their income level will not support two mortgages, so their offers must be contingent on selling their current home.  That creates two problems.  The first is that sellers can choose from multiple offers and they are much more likely to choose a non-contingent offer than a contingent one.  Secondly, these would-be home buyers are very reluctant to list their current home without having a new home under contract.  And it makes sense – they don’t want to sell their current house and not be able to buy a new one.  Let’s face it…moving stinks, and having to move twice stinks twice as much.  So many would-be home buyers are “sitting on the sidelines,” waiting for the market to get less competitive before they seriously look for homes.

Dunwoody Mortgage can actually help our clients better position themselves to win competitive home purchase situations.  You ask, “How can the lender help the buyer win a contract?”  I’ll tell you…in the next blog post.  If you or someone you know wants to buy a house and doesn’t have time to wait for the next post, call me.  I would love to tell you how Dunwoody Mortgage can help home buyers win in this sellers market.


Education is the key to home ownership

July 10, 2018

My colleague, Rodney Shaffer, is putting together a series on the advantages of home ownership. There are four posts as of this entry. They all focus on how home ownership, over time, provides a solid return in investment along with stabilizing/increasing the home owners own net worth.  Those are very good reasons to consider home ownership, but there is still on major hurdle for potential home buyers.

Many potential homebuyers are not aware of the realities of getting a mortgage and may be putting off their purchase because of it.

A new survey from FDIC-insured bank Laurel Road asked college-educated Americans about their homebuying plans. The poll found many misconceptions about the housing market and arranging financing, with down payments, interest rates, and affordability all weighing on potential buyers. The survey found that almost half of respondents are unaware of alterative down payment requirements; instead, believing that 20% down is barrier to their homeownership dreams. This is fundamentally untrue. Conventional loans require as little as 3% down and this is not limited to first time home buyers. FHA loans only require 3.5% down.

There is also a misconception about interest rates with many thinking they will hit 6% by year-end and believing they’ve missed out. This is also untrue. The Mortgage Bankers Association forecast for year end is just 4.6%, which is about where rates sit now. Why do people think mortgage rates will continue to rise? While mortgage rates can rise, most believe they will rise exponentially due to the Federal Reserve raising rates. The Federal Reserve raising rates doesn’t directly impact mortgage rates (it does impact home equity lines, car loan rates, credit card rates, etc.). This blog has discussed ad nauseam the fact that mortgage rates are not directly tied to the Federal Reserve raising rates. Recent examples can be found here, here and here. For the full list of entries dealing with this topic, check out this link. It is a lot of posts.

In reality, you STILL do not need 20% down in order to qualify to purchase a home. While rates are higher in 2018 versus previous years, they are not anywhere close to 6%. Don’t get mortgage rates confused with prime rate (that is over 5% and will be closer to 6% by the end of the year. Prime rate and mortgage rates are not the same thing!

Wanting to buy a home in Georgia but don’t have 20% down? Not a problem! Contact me today, and I can help you toward owning your new home!

Low housing inventory

May 22, 2018

It is definitely a seller’s market. The amount of inventory on the market is well below what is considered a balanced market – 6 months of homes is ideal. In the metro Atlanta area, the actual inventory is hovering around 3 months. Atlanta is not alone. Most major cities and almost all of the US faces a shortage of homes.

How did we get here?

I am sure many of you have heard the stat that a couple of hundred thousand jobs need to be created each month to keep up with population growth/new people entering the job market. Well, the same holds true for the housing market. Due to homes becoming dilapidated, burned down, flooded, disaster area, etc. you need new homes built every year to keep up with population growth. That is where one of our inventory problems lie. You see, housing construction has not kept pace with population growth in the U.S. for more than a decade. In order to catch up across the nation, builders will need to construct 7.3 million more homes. Also, home construction per household is near the lowest level in 60 years, John Rappaport, an economist at the Federal Reserve Bank of Kansas City, told the Wall Street Journal.

From 2009-2013/2014, it was a buyer’s market. There were too many homes on the market due to foreclosures and short sales from the housing crash. Now the pendulum swung the other way, and it is a seller’s market. Eventually, it will balance out, but that is of little solace for someone buying a home right now. Is there anything a buyer can do in this market to be more competitive with other buyers?

Yes, there is! Instead of doing a prequalification or pre-approval, buyers can start the loan process prior to being under contract to purchase a home. By going through underwriting early, I can provide my clients with a letter that says they are credit qualified and can close once an acceptable appraisal is back on the home. This can turn into a very quick close for a seller and gives the seller confidence in the buyer’s ability to close on the home loan.

Out there looking for your new home? Are you finding it to be a competitive environment? Give yourself an advantage by going through the underwriting process prior to being under contract. If you are looking to buy in the state of Georgia, contact me today. We can get the loan process started and put you on your way to home ownership.