Friday, July 10, 2015

1st Time Buyers Finally Crashing the Real Estate Party

There has been much conversation regarding the lack of first time home buyers in today’s real estate market. However, three recent reports seem to suggest that they are now entering the market in increasing numbers.

The most recent Existing Home Sales Report from the National Association of Realtors (NAR) reported that:

“The percent share of first-time buyers rose to 32 percent in May, up from 30 percent in April and matching the highest share since September 2012. A year ago, first-time buyers represented 27 percent of all buyers.”

And, in a recent Washington Post article, Ken Harney revealed that:

“According to a June 19 Campbell/Inside Mortgage Finance tracking survey, which polls 2,000 real estate agents nationwide, first-time buyers accounted for nearly 39 percent of home purchases in May; that’s the highest level since August 2010.”

Also, according to American Enterprise Institute's International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), the share of first-time buyers stood at an estimated 52.2 percent.

Lawrence Yun, the Chief Economist at NAR explained:

"The return of first-time buyers in May is an encouraging sign and is the result of multiple factors, including strong job gains among young adults, less expensive mortgage insurance and lenders offering low down payment programs."

Bottom Line

It seems that the number of first time buyers is increasing for the first time in a long time. This further lends credence to the fact that the residential housing market is back.

Thursday, July 9, 2015

Debunking Some Myths about Mortgage Availability

There seems to be a growing chasm between what the public believes to be need and what is actually needed to qualify for a residential home loan.

A recent survey by Ipsos reported that:

Two-thirds of those surveyed believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780.
Consumers overestimate the down payment funds needed to qualify for a home loan, with 36 percent thinking a 20 percent down payment is always required.

However, according to American Enterprise Institute's International Center on Housing Risk’s May First-Time Buyer Mortgage Risk Index (FBMRI), reality is far from perception. The report reveals:

70% of first-time buyer mortgages had a combined loan-to-value ratio of 95% or higher
About 20% of first-time buyers taking out mortgages had a FICO score below 660
25% had total debt-to-income ratios above 43 percent
The median first-time buyer with an agency mortgage made a down payment of only 3 percent, or $7200 in dollar terms.
The median FICO score for first-time buyers with agency mortgages was 705
For first-time buyers with FHA-insured loans, the median FICO score was only 672

These numbers contradict the frequent claims that first-time buyers face difficulties in obtaining mortgages.

Bottom Line

Stephen Oliner, co-director of AEI’s International Center on Housing Risk explained the reality of the situation.

“One hears all the time that first-time buyers have limited access to mortgage debt. But this isn’t true. Many first-time buyers with low FICO scores and little money down are buying homes every month.”

You might also enjoy reading...

1st Time Buyers Finally Crashing the Real Estate Party

One More Time…You DO NOT Need 20% Down

Buy vs Rent: What Really Creates Family Wealth?

First-Time Homebuyers Lead the Way in May

Monday, July 6, 2015

#1 Reason to Sell Your House Now!

If you are one of the many homeowners out there who are debating putting their house on the market this year, don’t miss out on the great opportunity you have right now!

The latest Existing Home Sales Report from The National Association of Realtors (NAR), reveals that the inventory of homes for sale has dropped to a 5.1-month supply.

Historically, a 6-month supply is necessary for a ‘normal’ market, explained below:

Inventory & Pricing | Keeping Current Matters

There are more buyers that are ready, willing and able to buy now, than there has been in years! The supply of homes for sale is not keeping up with the demand of these buyers.

Bottom Line

Home prices are appreciating in this seller’s market. Listing now will give you the most exposure to buyers who will be competing against each other to buy your house.