This housing market has many people talking about home values; where they are and where they are headed. It’s also interesting to look back and see how home prices compare to values prior to the housing crisis.
Every quarter, Freddie Mac releases their House Price Index. The index usually provides monthly home values for:
the nation as a whole
each of the 50 states
367 metropolitan statistical areas
This quarter, the report also included a look at today’s home values as compared to Pre-2008 values. Here is a graphic that breaks down the numbers on a state-by-state basis:
In the latest Rent vs. Buy Reportfrom Trulia, they explained that homeownership remains cheaper than renting with a traditional 30-year fixed rate mortgage in the 100 largest metro areas in the United States.
The updated numbers actually show that the range is an average of 5% less expensive in Orange County (CA) all the way up to 46% in Houston (TX), and 36% Nationwide!
A recent study by GoBankingRates looked at the cost of renting vs. owing a home at the state level and concluded that in 36 states it is actually ‘a little’ or ‘a lot’ cheaper to own, represented by the two shades of blue in the map below.
One of the main reasons that owning a home has remained significantly cheaper than renting is the fact that interest rates have remained at or near historic lows. Freddie Macreports that rates fell again last week to 3.43%.
Nationally, rates would have to rise to 10.6% for renting to be cheaper than buying – and rates haven’t been that high since 1989.
Bottom Line
Buying a home makes sense socially and financially. If you are one of the many renters who would like to evaluate your ability to buy this year, let’s get together and find you your dream home.
Interest rates have come a long way in the last 30 years.
The interest rate you secure directly impacts your monthly payment and the amount of house that you can afford if you plan to stay within a certain budget.
Interest rates are at their lowest in years… RIGHT NOW!
If buying your first home, or moving up to the home of your dreams is in your future, now may be the time to act!
No matter what shape or size your living space is, the concept and feeling of home can mean different things to different people. Whether it’s a certain scent or a favorite chair, the emotional reasons why we choose to buy our own home are, more often than not, the more powerful or compelling ones.
Every year, The Joint Center for Housing Studies at Harvard University conducts a survey to find driving factors behind why Americans decide to buy a home.
The top 4 reasons to own a home cited by participants of the survey were not financial.
1. It means having a good place to raise children & provide them with a good education
From the best neighborhoods to the best school districts, even those without children at the time of purchase may have this in the back of their mind as a major reason for choosing the location of the home that they purchase.
2. You have a physical structure where you & your family feel safe
It is no surprise that having a place to call home with the means for comfort and security is the number two reason.
3. It allows you to have more space for your family
Whether your family is expanding, or an older family member is moving in, having a home that fits your needs is a close third on the list.
4. It gives you control over what you do with your living space, like renovations and updates
Looking to actually try one of those complicated wall treatments that you saw on Pinterest? Tired of paying an additional pet deposit for your apartment building, or do you want to finally adopt that puppy or kitten you’ve seen online 100 times? Who’s to say that you can’t in your own home?
The 5th reason on the list, is the #1 financial reason to buy a home as seen by respondents:
5. Owning a home is a good way to build up wealth that can be passed along to my family
Either way you are paying a mortgage. Why not lock in your housing expense now with an investment that will build equity that you can borrow against in the future?
Bottom Line
Whether you are a first time homebuyer or a move-up buyer who wants to start a new chapter in your life, now is a great time to reflect on the intangible factors that make a house a home.
Many people wonder whether they should hire a real estate professional to assist them in buying their dream home or if they should first try to go it on their own. In today’s market: you need an experienced professional!
You Need an Expert Guide if You Are Traveling a Dangerous Path
The field of real estate is loaded with land mines. You need a true expert to guide you through the dangerous pitfalls that currently exist. Finding a home that is priced appropriately and ready for you to move in to can be tricky. An agent listens to your wants and needs, and can sift through the homes that do not fit within the parameters of your “dream home.”
A great agent will also have relationships with mortgage professionals and other experts that you will need in securing your dream home.
You Need a Skilled Negotiator
In today’s market, hiring a talented negotiator could save you thousands, perhaps tens of thousands of dollars. Each step of the way – from the original offer, to the possible renegotiation of that offer after a home inspection, to the possible cancellation of the deal based on a troubled appraisal – you need someone who can keep the deal together until it closes.
Realize that when an agent is negotiating their commission with you, they are negotiating their own salary; the salary that keeps a roof over their family’s head; the salary that puts food on their family’s table. If they are quick to take less when negotiating for themselves and their families, what makes you think they will not act the same way when negotiating for you and your family?
If they were Clark Kent when negotiating with you, they will not turn into Superman when negotiating with the buyer or seller in your deal.
Bottom Line
Famous sayings become famous because they are true. You get what you pay for. Just like a good accountant or a good attorney, a good agent will save you money…not cost you money.
According to Bankrate’s latest Financial Security Index Poll, Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment.
Bankrate asked Americans to answer the following question:
“Which would be the best way to invest money you did not need for more than 10 years?”
Real Estate came in as the top choice with 25% of all respondents, while cash investments (such as savings accounts and CD’s) came in second with 23%. The chart below shows the full results:
Sterling White, co-founder of Holdfolio, gave one reason as to why real estate may have ranked so high.
“Houses are tangible. You can physically see and feel the product. So you know where your money is going.”
July’s poll also found that for the “26th consecutive month, Americans’ sense of financial well-being improved when taking into account debt, savings, net worth, job security, and overall financial situation.”
Bottom Line
There are several reasons, both financial and non-financial, as to why homeownership makes sense. It is nice to see that Americans have returned to a belief in homeownership as the best investment.
Just over a month ago, the United Kingdom decided to withdraw from the European Union in a decision commonly known as Brexit. At that time there was a lot of speculation on how that decision would impact the U.S. residential mortgage market. Today, we want to look at the impact of the first 30 days.
Most believed that the Brexit decision would drive mortgage rates down and keep them down for some time. As CoreLogicreported:
“First-time buyers can count on continued low mortgage rates to help with affordability issues. Similarly, re-setting adjustable rate loans will have less of a rate shock, and in some cases may even go down.”
What has actually happened?
Initially, rates did fall. However, Freddie Mac has reported that rates have stabilized and have actually increased marginally each of the last two weeks. This prompted Freddie MacChief Economist Sean Beckett to say:
“Post-Brexit volatility tapered off over the last two weeks, allowing interest rates to bounce back a bit from their near-record 30-year mortgage rate lows.”
And, Capital EconomicsProperty Economist Matthew Pointon believes rates will continue to increase:
“Given we expect Brexit will have a minimal impact on the U.S. economy, we see no reason to change our forecast for mortgage rates to reach 3.85% by the end of this year, and 5.0% by the middle of 2018.”
For now, it appears that the impact of Brexit on the U.S. housing market was not as dramatic as some thought it could be.
The Consumer Price Index (CPI) was released by the Labor Department last week. An analysis by Market Watchrevealed the cost of rent was 3.8% higher than a year ago for the second straight month in June. That’s the strongest yearly price gain since 2007.
This coincides with a report released earlier this month in which AxioMetrics announced that rents are continuing to increase in 2016. The report revealed:
There was a 3.7% increase in effective rents in the second quarter of 2016 as compared to the same period last year.
That the effective rent growth this quarter compared to last quarter was 2.3%.
Annual effective rent growth was positive in 49 of the top 50 markets, based on number of units. Only Houston was negative, at -1.4%, as the fallout from energy-industry job losses and excess construction continues.
Here is a graph to illustrate the rate of increase over the last several years:
Bottom Line
With rents continuing to rise and mortgage interest rates still at historic lows, let’s meet up today to determine if you could turn your monthly rental cost into a home of your own.
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