It should come as no surprise that buying a home in a good
school district is important to homebuyers. According to a report from Realtor.com,
86% of 18-34 year-olds and 84% of those aged 35-54 indicated that their home
search areas were defined by school district boundaries.
What is surprising, however, is that 78% of recent homebuyers
sacrificed features from their “must-have” lists
in order to find homes within their dream school districts.
The top feature sacrificed was a garage at 19%, followed closely
by a large backyard, an updated kitchen, the desired number of bedrooms, and an
outdoor living area. The full results are shown in the graph below.
Buyers are attracted to schools with high test scores,
accelerated academic programs, art and music programs, diversity, and before
and after-school programs.
With a limited number of homes available to buy in today’s real
estate market, competition is fierce for homes in good school districts.
Danielle Hale, Chief
Economist for Realtor.com, explained
“Most buyers understand that they may not be able to find a home
that covers every single item on their wish list, but our survey shows that
school districts are an area where many buyers aren’t willing to compromise.
For many buyers and not just buyers with children, ‘location,
location, location,’ means ‘schools, schools, schools.’” (emphasis
buyers across the country, the quality of their children’s (or future
children’s) education ranks highest on their must-have lists. Before you start
the search for your next home, let’s get together to discuss the market
conditions in our area.
The number of building permits issued for single-family homes is
the best indicator of how many newly built homes will rise over the next few
months. According to the latest
U.S. Census Bureau and U.S.
Department of Housing & Urban Development Residential Sales Report, the number of building permits issued in June was 850,000,
a 0.8% increase from May.
will this impact buyers?
More inventory means more options. Mark
Fleming, First American’s Chief Economist, explained that this is good news for the
housing market – especially for those looking to buy:
“The continued year-over-year growth in
completions means more homes on the market in the short-term, offering some
immediate relief in alleviating housing supply shortages.”
will this impact sellers?
More inventory means more competition. Today,
because of the tremendous lack of inventory, a seller can expect:
A great price on their home as buyers outbid each other for it.
A quick sale as buyers have such little inventory to choose
Fewer hassles as buyers don’t want to “rock the
boat” on the deal.
If you are
considering selling your house, you’ll want to beat this new competition to
market to ensure that you get the most attention on your listing and the best
price for your house.
Some are attempting to compare the current housing market to the market-leading up to the “boom and bust” that we experienced a decade ago. They look at price appreciation and conclude that we are on a similar trajectory, speeding toward another housing crisis.
However, there is a major difference between the two markets.
Last decade, while demand was being artificially created by extremely loose
lending standards, a tremendous amount of inventory was coming to the market to
satisfy that demand. Below is a graph of the inventory of homes available
for sale leading up to the 2008 crash.
A normal market should have approximately 6 months supply of
housing inventory. As we can see, that number jumped to over 11 months supply
leading up to the housing crisis. When questionable mortgage practices ceased,
and demand dried up, there was a glut of inventory on the market which caused
prices to drop as there was too much supply and not enough demand.
is radically different!
There are those who believe that low mortgage rates have created an artificial demand in the current market. They fear that if mortgage rates continue to rise, some of the current demand will dry up (which is a possibility).
However, if we look at supply again, we can see that the current supply of homes is well below the norm of 6 months.
not have a glut of inventory like we did back in 2008 and home values won’t
come tumbling down. Instead, if demand weakens, we will return to a normal
market (approximately a 6-month supply) with historic levels of appreciation
Over the next five years, home prices are expected to
appreciate, on average, by 3.6% per year and to grow by 18.2% cumulatively,
according to Pulsenomics’ most recent Home Price Expectation
what does this mean for homeowners and their equity position?
As an example, let’s assume a young couple purchased and closed
on a $250,000 home this January. If we only look at the projected increase in
the price of that home, how much equity will they earn over the next 5 years?
Since the experts predict that home prices will increase by 5.0%
in 2018, the young homeowners will have gained $12,500 in equity in just one
Over a five-year period, their equity will increase by over
$48,000! This figure does not even take into account their monthly
principal mortgage payments. In many cases, home equity is one of the largest
portions of a family’s overall net worth.
only is homeownership something to be proud of, but it also offers you and your
family the ability to build equity you can borrow against in the future. If you
are ready and willing to buy, find out if you are able to today!
It’s no mystery that cost of living varies drastically depending
on where you live, so a new study by GOBankingRates set
out to find out what minimum salary you would need to make in order to buy a
median-priced home in each of the 50 states, and Washington, D.C.
States in the Midwest came out on top as most affordable,
requiring the smallest salaries in order to buy a median-priced home. States
with large metropolitan areas saw a bump in the average salary needed to buy
with California, Washington, D.C., and Hawaii edging out all others with the
highest salaries required.
Below is a map with the full results of the study:
this advice to anyone considering a home purchase,
“Before you buy a home, it’s important to find
out if you can afford the monthly mortgage payment. To do this, some financial
experts recommend your housing costs — primarily your mortgage payments —
shouldn’t consume more than 30 percent of your monthly income.”
As we recently reported, research from Zillow shows
that historically, Americans had spent 21% of their income on owning a
median-priced home. The latest data from the fourth quarter of 2017 shows that
the percentage of income needed today is only 15.7%!
are considering buying a home, whether it’s your first time or your fifth time,
let’s get together to evaluate your ability to do so in today’s market!
Some homeowners have recently done a “cash out” refinance and
have taken a portion of their increased equity from their house. Others have
sold their homes and purchased more expensive homes with larger mortgages. At
the same time, first-time buyers have become homeowners and now have mortgage
payments for the first time.
These developments have caused concern that families might be
reaching unsustainable levels of mortgage debt. Some are worried that we may be
repeating a behavior that helped precipitate the housing crash ten years ago.
Today, we want to assure everyone that this is not the case.
Here is a graph created from data released by the Federal
Reserve Board which shows the Household
Debt Service Ratio for mortgages as a percentage of
disposable personal income. The ratio is the total quarterly required mortgage
payments divided by total quarterly disposable personal income. In other words,
the percentage of spendable income people are using to pay their mortgage.
Today’s ratio of 4.44% is nowhere near the ratio of 7.21% during
the peak of the housing bubble and is instead at the lowest rate since 1980
“The Debt Service Ratio for mortgages is near
the low for the last 38 years. This ratio increased rapidly during the housing
bubble and continued to increase until 2007. With falling interest rates, and
less mortgage debt, the mortgage ratio has declined significantly.”
families paid a heavy price because of questionable practices that led to last
decade’s housing crash. It seems the American people have learned a lesson and
are not repeating that same behavior regarding their mortgage debt.
With home prices on the rise and buyer demand strong, some
sellers may be tempted to try and sell their homes on their own (FSBO) without
using the services of a real estate professional.
Real estate agents are trained and experienced in negotiation
and, in most cases, the seller is not. Sellers must realize that their ability
to negotiate will determine whether or not they get the best deal for
themselves and their families.
a list of some of the people with whom the seller must be prepared to negotiate
if they decide to FSBO:
The buyer who wants the best deal possible
The buyer’s agent who solely represents the best interest of the
The buyer’s attorney (in some parts of the country)
The home inspection companies, which work for
the buyer and will almost always find some problems with the house
The termite company if there are challenges
The buyer’s lender if the structure of the mortgage requires the
The title company if there are challenges with certificates of
occupancy (CO) or other permits
The town or municipality if you need to get the CO permits
The buyer’s buyer in case there are challenges with the house
your buyer is selling
Your bank in the case of a short sale
percentage of sellers who have hired real estate agents to sell their homes has
increased steadily over the last 20 years. Let’s get together and discuss all
we can do to make the process easier for you.
The results of the 2018 Rental Affordability ReportfromATTOM show that buying a
median-priced home is more affordable than renting a three-bedroom property in
54% of U.S. counties analyzed for the report.
The updated numbers show that renting a three-bedroom property
in the United States requires an average of 38.8% of income.
The least affordable market for renting was Marin County, CA,
just over the Golden Gate Bridge from San Francisco, where renters spend a
staggering 79.5% of average wages on
rent, while the most affordable market was Madison County, AL where 22.3% of average wages went
interesting findings in the report include:
rose faster than income in 60% of counties
Average rent rose faster than median home prices in 41% of
While median home prices rose faster than average rents in 58%
a home makes sense socially and financially. If you are one of the many renters
out there who would like to evaluate your ability to buy this year, let’s get
together to find your dream home.