Buying a house is an exciting and HUGE milestone, but the home inspection process can come with some surprises and seem a little daunting. Here are 4 tips to help you prepare for this very important
Apprehensions of home buying
According to realtor.com® data there are 250,000 fewer starter homes, those priced under $200,000, now than there was two years ago, in May 2015. Lawrence Yun, chief economist of the National Association of Realtors®, presented a forecast of the future of the housing market for 2018 at Legislative Meeting & Trade expo this year. He states the percentage of homeowners that began searching for homes in 2017 are still looking for homes 2018. There are many factors that have led to the current “inventory shortage”, to include a significant decrease in the average number of days on the market which in just the last quarter have had startling decreases. “Total housing inventory at the end of March was 1.67 million existing homes available for sale, which is 7.2 percent lower than a year ago (1.80 million). Inventory has trended down steadily for the past five years, said Yun, and the country is now experiencing the lowest inventory levels in a generation; unsold inventory is at a 3.6-month supply at the current sales pace, down from 3.8 months a year ago.”
You may wonder how the market got in this condition. With there being fewer starter homes available, millennials, baby boomers and investors are all going after the same products. Most millennials entering the job market are ready to leave their parent’s basement (so to speak). Baby boomers are down-sizing their homes because they no longer need larger homes. While investors are finding this price range of homes best for their ROI.
At this time, interest rates are creeping up slightly. In February, average rates were about 3.99% and now just a few months later have quietly risen to 4.75%. This is not near the amount of increase noted in 2008-2009 but rising interest rates are causing some angst in considering buying a home at this time. The interest rates may be affected by GDP, unemployment rates and considerations by the fed. It is expected that interest rates will continue to rise through out the remainder of the year. What may have been seemly expensive will be more expensive 6 months now. The slim inventory of available housing will now be on the front steps of is it too expensive to acquire property.
According the Aspiring Homeowner’s profile published in January 2018, of the non-owners, 46 percent were 34 years or under, 57 percent make an income of under $50,000, and 41 percent live in suburban areas. Another issue affecting the housing market in terms of affordability is the debt of millennials.Among non-owners, 47 percent cannot save because they have limited income, 30 percent because of their student loan debt, 28 percent because of rising rental costs, and 19 percent because of health and medical expenses Student Loan debt is hindering young people who have good jobs from purchasing homes. There are credit to debt ratio with student loan debt is too high. Many are opting to rent and utilizing a room mate or lease out options and being very creative with their living arrangements.
Last year, student loan debt topped $1.2 trillion dollars with more than 40 million borrowers carrying student loan debt, the age of the first time homebuyer is edging up. Among millennials, home ownership is down from 42% to 36% today. This has caused a significant decrease in those looking for homes from that perspective, but the other very popular groups are seeking to down size or invest. Among non-homeowners, 34% believe it is not a good time to purchase as home as they are not able to save with the attributes of their student loan debt.
There is a significant increase in buyers building homes, but many have apprehensions about building their first home. They would rather acquire a home where the so called kinks have already been worked out rather than deal with selecting cabinetry, tile and the creative financing aspects of a new build.
According to the “Home Survey for Housing Opportunities and Market Experience” published in March 2018, eighty percent of people aged 55 to 64 think now is a good time to sell compared to 72 percent of all other age groups. For home buyers with large homes and wish to downsize find it easier to sell their homes at top dollar values, but are realizing the competition for acquiring a home tough. Many are finding homes they loves, but aren’t willing to pay the same amount almost equaling the current payment of the home they live in. They are choosing to stay in their current locations and yield returns of large homes with decrease mortgages because equity.
Investors are finding a decrease in available foreclosed homes. In Jane Dollinger’s article called Existing-Home Sales Slide 2.5 Percent in April distressed sales – foreclosures and short sales – were 3.5 percent of sales in April (lowest since NAR began tracking in October 2008), down from 4 percent last month and 5 percent a year ago. Three percent of April sales were foreclosures and 0.5 percent were short sales. Investors are also finding “the good deals” are harder to find. They are weighing the options of amount of purchase, what will it take financially to upgrade a project and what is the rate of return on their investment.
The future of the real estate market is uncertain, but with historical data one can see there is a likelihood of increased interest rates, cost of living and changes in the economy that will affect the way people are buying homes. There are options to help with any situation. Student Loan debt can be payed in several agreed terms. Credit repair programs can help mend and increase credit scores. Creating new saving plans or finding creative ways to save and paying off debt are always good ideas. But at the end of all there is nothing more important than determining your ultimate goals and finding a professional who is willing to help will place you in a positive wave to ride toward building the American Dream.
"Rocky Top, You'll always be home sweet home to me....Good Ole Rocky Top... Rocky Top Tennessee!!!"Those words have help shaped the spirit of Tennessee and it is with that spirit that many have recogn....