Posts Tagged ‘home values’

Taking on the spring market

April 16, 2019

It is definitely spring, and the housing market is heating up. It is time to take advantage of new homes on the market. What am I seeing this year that is different from last year:

  1. Mortgage rates are lower this year than they were last year at this time. Right now, they are lower by roughly a half point!
  2. The rise in home values has slowed each month for the past 10 months. The combination of slowing home values and a drop in mortgage rates gives buyers roughly 6% more buying power today than they had this time last year.
  3. I am seeing sellers begin to give money toward closing costs. Don’t read this statement as sellers are paying ALL closing costs again. What I mean is instead of every purchase contract I see where the seller is giving $0 to the buyer for closing costs, now I am seeing contracts with the seller giving a few thousand to the buyer.
  4. Homes sitting on the market for sale for too long are now getting price reductions. Last year, homes weren’t sitting that long and few were getting price reductions.

What to make of all this information? While still a seller’s market, the market is softening and buyers have more purchasing power. Now is the time to act!

I know what you may be thinking…

  • I don’t have enough money to put 20% down…  Not a problem. Did you know a $500,000 home can be purchased with about a 3% down payment. While one’s target may not be $500,000, 3% is all it takes to get into a home.
  • My credit isn’t perfect… Again, not a problem. You don’t need perfect credit to purchase a home. Conventional and FHA loans allow for credit scores down to 620, which is below average credit.
  • I just started a new job, so I can’t buy a home… Not necessarily. A new job doesn’t mean someone lost their chance at buying a home. Being able to qualify for a home depends more on how they are paid (W2, hourly, salary, 1099) versus how much they are paid.

Don’t let what you’ve read on the internet get you down. Just because you read it online, or someone in the office break room told you something doesn’t make it true. It is easier to buy a home than many people think. If you are looking to buy a home in Georgia, contact me  today. Let’s get the process started. In just a few minutes, we’ll be well on our way to getting you into a new home.

What does residential real estate do next?

November 15, 2011

I think we are all tired of hearing about residential real estate market and the drop in value of our homes. As many us feel no turnaround is in sight, what do we do next?

Nothing and focus on the future. Why?

Unless you are in a position where you must sell your home, you are only sitting on a paper loss. If you are planning on being in your home for many years to come, you will most likely return to profitability on your home over time.

As bad the real estate market seems, if you do not yet own a home, you should jump in soon. Homes are at an unbelievable value right now with the combination of historically low mortgage rates and the current value of homes. Anyone could look like a Donald Trump three years from now in this market (well, maybe not the hair part).

For those of us (like myself) who have lost significant equity in our homes, the end is closer than you think. Mortgages going 90 days late (or more) have dramatically slowed down. Thus, the future supply of the foreclosure pipeline is also going to slow down.

We all hear about the shadow inventory. These are homes that people have defaulted on their mortgage, but banks have yet to put those homes on the market or completed the foreclosure process. Banks will begin pushing this inventory into the market starting toward the end of this year and the beginning of next. It will take 6-9 months to get the remaining inventory sold. In theory, some markets may wind up with a housing shortage toward the end of 2012.

Once the shadow inventory is gone, combined with the reduced amount of new homes being built, we will have created the perfect storm for an escalation in home values. The suppression in home values won’t last forever. So look to the future, it will be bright and the housing nightmare will be gone.

“Should I buy?”

October 11, 2011

I get that question a lot these days. “Should I buy a home?” It is a valid question to ask. Some may be concerned about the stability of their jobs. Others may be concerned about whether or not we’ve hit “the bottom” in regards to housing prices. I do understand the reasoning behind those concerns, but let’s look at it from another angle.

The chart above shows the correlation between purchasing power and home values. Currently, we are siting in one of the best periods for buying a home – low interest rates (purchasing power) with lower home values. This combination is very tempting, but still some are holding back. Why? It seems people feel rates are going to stay low forever. That isn’t the case. Interest rates are like stocks… sometimes they go up/down in price for unexpected reasons. For instance…

This time last year, interest rates were at the same point they are now. In the high 3’s. Then around the start of November, interest rates began to climb. Before the end of December (about a 6 week period), interest rates went from the high 3’s to the mid 5’s. It was an unexpected jump and put some people’s home buying/refinancing plans on hold.

What kind of a difference does that jump in rates make? If you qualified for a principal and interest payment of $1,000 each month, then you’d be able to purchase a home up to $250,000 with a 20% down payment while rates remain at their current levels. With rates in the mid 5’s, that same monthly payment of up to $1,000 would cause the purchase price to decrease to $220,000. That is a loss of $30,000 of purchasing power.

In short, the question you should be asking yourself is not “should I buy?,” but “what am I waiting on?” If you plan to remain in the area you are currently residing for the next few years, this is one of the best times ever to buy a home due to the combination of low rates and lower home values. If you are looking to purchase a home in the state of Georgia, I’d be glad to help you get started!