Many sellers believe spring is the best time to put their homes on the market because buyer demand traditionally increases at that time of year. What they don’t realize is if every homeowner believes the same thing, then that’s when they’ll have the most competition. So, what’s the #1 reason to list your house in the winter?
Taking the fear out of the mortgage process is simple when you know some key facts! A considerable number of potential buyers shy away from buying a home because they’re uncertain about the process – particularly when it comes to qualifying for a mortgage.
For many, the mortgage process can be scary, but it doesn’t have to be!In order to qualify in today’s market, you’ll need a down payment (the average down payment on all loans last year was 5%, with many buyers putting down 3% or less), a stable income, and a good credit history. Once you’re ready to apply, here are 5 easy steps Freddie Mac suggests to follow:
- Find out your current credit history and credit score– Even if you don’t have perfect credit, you may already qualify for a loan. The average FICO Score® for all closed loans in September was 737, according to Ellie Mae.
- Start gathering all of your documentation– This includes income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
- Contact a professional– Your real estate agent will be able to recommend a loan officer who can help you develop a spending plan, as well as help you determine how much home you can afford.
- Consult with your lender– He or she will review your income, expenses, and financial goals in order to determine the type and amount of mortgage you qualify for.
- Talk to your lender about pre-approval– A pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change) and demonstrates to home sellers that you’re serious about buying.
Bottom LineTaking the fear out of the mortgage process is simple. Just do your research, reach out to professionals, stick to your budget, and be sure you’re ready to take on the financial responsibilities of becoming a homeowner. Be sure to call me if you need sound advice on where to start.
The gap between the increase in personal income and residential real estate prices have been used to defend the concept that we are experiencing a housing affordability crisis today. It is true that home prices and wages are two key elements in any housing affordability equation. There is, however, an extremely important third component to that equation: mortgage interest rates. Mortgage interest rates have fallen by more than a full percentage point from this time last year. Today’s rate is 3.75%; it was 4.86% at this time last year. This has dramatically increased a purchaser’s ability to afford a home. Here are three reports validating that purchasing a home is in fact, more affordable today than it was a year ago: CoreLogic’s Typical Mortgage Payment
“Falling mortgage rates and slower home-price growth mean that many buyers this year are committing to lower mortgage payments than they would have faced for the same home last year. After rising at a double-digit annual pace in 2018, the principal-and-interest payment on the nation’s median-priced home – what we call the “typical mortgage payment”– fell year-over-year again.”The National Association of Realtors’ Affordability Index
“At the national level, housing affordability is up from last month and up from a year ago…All four regions saw an increase in affordability from a year ago…Payment as a percentage of income was down from a year ago.”First American’s Real House Price Index (RHPI)
“In 2019, the dynamic duo of lower mortgage rates and rising incomes overcame the negative impact of rising house price appreciation on affordability. Indeed, affordability reached its highest point since January 2018. Focusing on nominal house price changes alone as an indication of changing affordability, or even the relationship between nominal house price growth and income growth, overlooks what matters more to potential buyers – surging house-buying power driven by the dynamic duo of mortgage rates and income growth. And, we all know from experience, you buy what you can afford to pay per month.”
Bottom LineThough the price of homes may still be rising, the cost of purchasing a home is actually falling. If you’re thinking of buying your first home or moving up to your dream home, let’s connect so you can better understand the difference between the two.
Tom Petty famously penned the words, “the waiting is the hardest part” in his early 80’s hit song The Waiting. His thought process can surprisingly also be applied to individuals considering selling their homes today. Traditional thinking would suggest it may be best to wait until the spring to sell. After all, there is a flood of buyers in the market during the spring. But right now may, in fact, be an even better time to list your home! We can see the overall economy is good: wages are rising, there are near-record-low unemployment rates, and mortgage interest rates are still very low too. Over the past 10+ years, the housing market has stabilized. So what (if anything) is the biggest challenge in the housing market today? The answer is simple: it’s inventory. According to the Existing Home Sales Report by the National Association of Realtors,
“Total housing inventory at the end of September sat at 1.83 million, approximately equal to the amount of existing-homes available for sale in August, but a 2.7% decrease from 1.88 million one year ago. Unsold inventory is at a 4.1-month supply at the current sales pace, up from 4.0 months in August and down from the 4.4-month figure recorded in September 2018.”
What does this mean?While homes are coming to the market, they aren’t coming fast enough! Right now, across the country there are less than 6 months of overall inventory of homes for sale, putting us in a seller’s market. The challenge is that there are not enough homes for sale to increase the supply needed for the number of people who want to buy. That's especially true in the starter and middle-level markets. To be in a balanced market (meaning we have enough inventory for the number of buyers in the market), we need to have 6 months of inventory available. Today we are nowhere near that number, and as a matter of fact, the last time we reached that height was August 2012 (as shown in the graph below):When we look at the inventory challenge today, we can see that now is a great time to sell your house. Truthfully, waiting may end up being the hardest part in the long run. This landscape is a great place for sellers who own homes in the starter and middle-level markets to take the opportunity to sell in a sellers’ market before inventory catches up with demand, as it usually does. Serious buyers are actively in the market and ready to make a move at this time of year. To those who are ready to move up, selling before more homes are listed could mean a significant seller’s advantage while inventory is limited at the lower end like it is today The upper level of the market has much more inventory available to move into, so it’s a win across the board.
Bottom LineIf you’re thinking of selling your home, don’t wait – now is the time to make your move! Take advantage of the high housing demand and the low inventory of homes at the lower end of the market. Use your purchasing power while mortgage rates are low to go after the move-up home of your dreams. Give me a call at 516-429-9399 and get together to decide if now is the right time for you. There's not been a better time!
Here are 4 reasons to buy a home this fall, instead of waiting.