Buying a Home - Indicators Say Now
Have you ever sat back and thought to yourself, "man, I wished I done that" when you realize a good opportunity has come and gone or felt regret that you didn't act sooner rather than later. Well, the housing market is speaking that now. Would you rather have a mortgage for $900 a month, or $1,200? Even with FHA low down payment financing, would you rather have a down payment of $5,000 or a down payment of $6,500?
FICO New Credit Scoring Policy to Help Buyers
NAR President Steve Brown of Dayton, Ohio, says the new credit scoring calculation recently announced by Fair Isaac Corp., or FICO, will improve access to home ownership. "NAR supports efforts to broaden access to credit for qualified home-buyers, especially those who have been shut out of the housing market or forced to pay higher interest rates because of flawed credit scores," he said. "A solid credit score is necessary to keep borrowing costs down."
Many buyers think a home is just out of reach, but looking at this over-all picture, events and time are on buyers side for the moment, more so than last year. Even if you have a few credit issues, Realtors know lenders that can work with you to make the improvements in your credit profile to get you moving in the right direction. Especially important because of rising prices and lower mortgage rates won't last forever and the cost of rent is going up.
House Value - Rising Prices
Going into the Fall market soon, I'm looking back at July and mid-summer activity, and according the the National Association of Realtors, we've hit and important benchmark with existing home sales and decline in distressed homes sales.
Chief Economist of NAR, Lawrence Yun stated on August 21st that sales momentum continues to build, slowly, behind stronger job growth with improvements with inventory conditions: "The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market," he said. "More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise."
Yun efforts to warn fence sitters and potential buyers to take action due to the likelihood of increasing declines in affordability. "Although interest rates have fallen in recent months, median family incomes are still lagging behind price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy," he said.
Reviewing national statistics compiled by NAR, we can see that median home prices increased 4.9% in July to $222,900 compared to July of 2013 and the 29th consecutive month of year over year price gains. Here in the Midwest, existing-home sales increased 1.7 percent to an annual level of 1.22 million in July, but remain 4.7 percent below July 2013. The median price in the Midwest was $175,200, up 4.1 percent from a year ago.
Yun says the deepest housing wounds suffered during the Great Recession are beginning to fully heal. "To put it in perspective, distressed sales represented an average of 36 percent of sales during all of 2009," he said. "Fast-forward to today and rising home values are helping owners recover equity and strong job creation are assisting those who may have fallen behind on their mortgage due to unemployment or underemployment.
Buying Now or Regretting Later
Add all this up to get an idea of the bigger picture, if it's possible without straining your personal financial picture I would say buy if at all possible. The biggest things holding buyers back are credit issues, possibly student loan debt, and insecurity about the housing market. I advise potential buyers to formulate a plan and make a 6-12 month goal of cleaning up credit concerns. You can actually work with a savvy lender about credit and what to do to get that score where it needs to be and work on debt to income ratios to bring home ownership into the realm of possibility.
As Realtors, we work with and follow up with clients sometimes for a few years, helping bump them along on the path to owning a home, and often refer to lenders for sound advice and strategy concerning their credit profile. You can contact a Realtor through this site in your area, or if you're looking in the Greater Dayton Metro area, give me a shout and I'll be glad to hook you up and help you begin making your preparations. Look at it this way, do you want to pay another $100-$300 a month for a home next year or further down the road?
You may know this already, but not having an actionable plan with discernible, simple, effective steps can leave you living with regrets over not having taken action sooner and can cost you thousands more every year over your lifetime either stuck paying rising rents or having a higher mortgage payment with less home; something no one wants.
Have questions? Need advice or assistance? Let me know, I'm glad to help, even if you're not in my area.
Juanita Limes - Your Greater Dayton Area Ohio Realtor - Give me a shout for all your real estate needs,
937-776-6903 or just email me.