As we are about to bring in the New Year, families across the country will be deciding if this is the year that they will sell their current house and move into their dream home. Many will decide that it is smarter to wait until the spring “buyer’s market” to list their house. In the past, that might have made sense. However, this winter is not like recent years.
The recent jump in mortgage rates has forced buyers off the fence and into the market, resulting in incredibly strong demand RIGHT NOW!! At the same time, inventory levels of homes for sale have dropped dramatically as compared to this time last year.
Here is a chart showing the decrease in inventory levels by category:
Demand for your home is very strong right now while your competition (other homes for sale) is at a historically low level. If you are thinking of selling in 2017, now may be the time.
According to a recent analysis by CoreLogic, Millennial renters (aged 20-34) who have student loan debt also have higher credit scores than those who do not have student loans.
This may come as a surprise, as there is so much talk about student loans burdening Millennials and holding them back from many milestones that previous generations have been able to achieve (i.e. homeownership, investing for retirement).
CoreLogic used the information provided on rental applications and the applicants’ credit history from credit bureaus to determine if there was a correlation between student loan debt and credit scores.
The analysis concluded that:
“Student loan debt did not prevent millennials from access to credit even though it may delay their homebuying decisions.”
In fact, those with a higher amount of debt actually had higher credit scores.
“Renters with student loan debt have higher average credit scores than those without; and those with higher debt amounts have higher average credit scores than those with lower student loan debt amounts.”
Millennials are on pace to become the most educated generation in our nation’s history, with that comes a pretty big bill for education. But there is a light at the end of the tunnel:
“Despite the fact that student loan debt has grown into the nation’s second largest consumer debt, following mortgage, and has created a significant financial burden for millennials, it does not appear to prevent millennials from accessing credit.”
The National Association of Realtors (NAR) recently released their latest Existing Home Sales Report revealing that distressed property sales accounted for 4% of sales in September. This is down from 7% in 2015, and is the lowest figure since NAR began tracking distressed sales in October 2008.
Below is a graph that shows just how far the market has come since January 2012 when distressed sales accounted for 35% of all sales.
Existing Home Sales Hit 2nd Highest Figure Since June
Mortgage interest rates remained well below 4% in September at 3.46%, prompting existing home sales to stay at a healthy annual pace of 5.47 million. Month-over-month sales were up 3.2%.
Inventory of homes for sale remains below the 6-month supply that is necessary for a normal market, as it fell 2.2% to a 4.5-month supply. The shortage in inventory has contributed to the median home price rising an additional 5.6% to $234,200.
NAR’s Chief Economist, Lawrence Yun had this to say about the lack of inventory:
“Inventory has been extremely tight all year and is unlikely to improve now that the seasonal decline in listings is about to kick in.”
There is good news though, as Yun went on to say:
“There’s hope the leap in sales to first-time buyers can stick through the rest of the year and into next spring. The market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the homeownership rate.”
If you are debating putting your home on the market this year, now may be the time. Buyers are still out there looking for their dream home. Let’s get together to determine your best plan. Jill, 402.618.9984
If you’re ready to purchase a house, call me 1st to get the process started! Jill, 402.618.9984
In many markets across the country, the amount of buyers searching for their dream homes greatly outnumbers the amount of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.
Even if you are in a market that is not as competitive, knowing your budget will give you the confidence of knowing if your dream home is within your reach.
Freddie Mac lays out the advantages of pre-approval in the My Home section of their website:
“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”
One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you with this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”
Freddie Mac describes the 4 Cs that help determine the amount you will be qualified to borrow:
- Capacity: Your current and future ability to make your payments
- Capital or cash reserves: The money, savings and investments you have that can be sold quickly for cash
- Collateral: The home, or type of home, that you would like to purchase
- Credit: Your history of paying bills and other debts on time
Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.
Many potential home buyers overestimate the down payment and credit scores needed to qualify for a mortgage today. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so as well.