First-time Homebuyers: Make Foresight 20/20

With any first experience, mistakes are bound to happen as you tread unfamiliar territory. As Atlanta’s real estate sizzles, the inventory crunch eases and mortgage lenders begin to ease underwriting standards, more hopeful homebuyers are taking the plunge into buying their first home.

Shaun Graham, Vice President of Southeast Mortgage

Shaun Graham, Vice President of Southeast Mortgage

Buying your first home can be a daunting task.   Because the stakes are so high, one bad mistake can be financially and emotionally devastating.  Luckily for today’s first-time homebuyers, there is a wealth of online information to help you avoid the typical pitfalls of buying a home and help you learn from others’ past mistakes. We discuss some of the top mistakes new home buyers make, many of which can be avoided by planning responsibly for the future and not allowing yourself to get too swept up in the thrill of making your first home purchase.

Forgoing Home Inspection

According to the American Society of Home Inspectors, 10 percent of newly purchased homes aren’t inspected. A $500 two-hour inspection (a rough estimate) can save thousands of dollars in damages later while educating you about the home under consideration.

It’s important to remember that a home on the market has been “spruced up” to accentuate its best features and minimize its potential flaws.  You need to make certain that the things you don’t see are in good working order.  To protect yourself, it’s wise to make the purchase of the home contingent on your approval of the home inspection report.  Learning upfront about water damage in the attic, foundation cracks, gas leaks or that the AC unit is about to go will offer you more leverage when making an offer. Depending on the results of the inspection report you can decide to reduce your offer, make the seller responsible for repairs or you can back out of the deal altogether.

“It takes a trained eye to be able to see the problems that can exist in a home,” said Bill Loden, president of the American Society of Home Inspectors. “The inspection can also give the first-time buyer a bit of a schooling on the house and how to maintain it.”

Too Much Online Faith

Though Zillow and Trulia ease many burdens of home shopping, some people consider the two listings websites, as the be all and end all.  However, relying exclusively on the Internet for listings can give you a skewed cost of actual value. The recommended value of the property online isn’t necessarily what the seller believes it to be or even what it’s actually worth.

Online listings also can’t accurately portray neighborhood friendliness, the view from the balcony, surrounding nightlife or other factors that may be important to you.

Just like you wouldn’t solely judge a person based on their online profile, you shouldn’t base your decision about a home merely by looking at its online profile. It’s important to check out any homes of interest in person to get a true feel for what the home has to offer.

Overlooking Hidden Costs

Unfortunately, even though you feel ready to be your own landlord or purchase a home that your future children can grow up in, it doesn’t mean you’re financially ready. Homeownership costs extend far beyond monthly mortgage payments and the costs accrue even before you sign the contract. When looking at your finances, make sure you factor in closing costs, moving costs, the home inspection, escrow fees, home insurance, property taxes, costs of repairs and maintenance, possible homeowners association fees and more.

Buying a home shouldn’t be a financial strain and stressor. The purchase of a new home should be an exciting experience that ultimately elevates the quality of your life while serving as an investment in your future. Before you take the plunge, take the time to avoid common pitfalls and factor in all financial aspects to avoid drowning in stress and debt.

Posted in Uncategorized | Tagged , , , , , | Leave a comment

Atlanta Summer Real Estate and Recovery Begins to Simmer

After a record-breaking month for the Atlanta residential real estate index, the sizzling summer is beginning to simmer, as data and analysts believe that recovery is showing signs of stalling. The July Cal-Culator posts a 6.1 rating, a 0.1-drop from the previous month. Though foreclosures continue to drop and builder confidence levels continue to increase, price growth, home sales and housing production have slowed.

The July Cal-Culator

The July Cal-Culator

Housing Production

The South lagged behind the rest of the country in new home starts, bringing down the national average significantly, according to the U.S. Census Bureau News by the U.S. Department of Housing and Urban Development. The South experienced a nearly 30 percent drop in June from May while the national rate fell 8.1 percent.

“The numbers are a little disappointing, but May was unusually high and some pull back isn’t completely unexpected,” said Kevin Kelly, chairman of the National Association of Home Builders and a home builder and developer from Wilmington, Del. “Our surveys show that builders are confident about the future and we are still seeing a gradual upward trajectory in housing demand.”

Home Prices

The latest S&P/Case-Shiller Home Price Indices data, released July 29, revealed that U.S. home prices increases are slowing. The 20-City Composite (where Atlanta is included) increased by 9.3 percent, which is “down significantly from the 10.8 percent returns reported last month.” However, Atlanta was one of nine cities that posted double-digit increases as the city experienced an 11.2 percent increase from the previous month. Unfortunately, Atlanta posted a year-to-year decline.

“Housing has been turning in mixed economic numbers in the last few months. Prices and sales of existing homes have shown improvement while construction and sales of new homes continue to lag,” said David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “At the same time, the broader economy and especially employment are showing larger improvements and substantial gains.”

However, Zillow believes that this data is a sign of a slowing recovery, rather than large improvements.

“Nationally, today’s Case-Shiller data is consistent with the slow glide-path down towards a more normal housing market we’ve been experiencing for the past few months,” said Stan Humphries, Zillow’s chief economist in Forbes.

Home Sales

Nationally, new single-family home sales fell 8.1 percent in June from May, according to new data by the U.S. Department of Housing and Urban Development. The South posted a -9.4 percent month-over-month drop and a -17.4 percent year-over-year decline.

Builder Confidence

As stated in last month’s column, any number over 50 on the NAHB and Wells Fargo Housing Market Index indicates that the majority of homebuilders view conditions as “good” rather than “poor.” July was the first month since January that builder confidence rose above 50, reaching 53.

Foreclosures

CoreLogic’s National Foreclosure Report for June revealed that the foreclosure inventory was down 3.9 percent in June from May, marking 32 months of continuous decline, and completed foreclosures decreased 9.9 percent year-over-year. However, economists are still reminding consumers about the long road ahead.

“While 32 straight months of year-over-year decline in the foreclosure rate is cause for celebration, the total number of homes still in the foreclosure process remains almost four times as high as the average in the early 2000s,” said Mark Fleming, chief economist for CoreLogic.

The next Cal-Culator will be released September 9 and will hopefully reflect a reigniting of the industry.

Posted in Uncategorized | Tagged , , , , , , , , , , , | Leave a comment

The $3.5 Billion Real Estate Merge

The real estate headlines over the past week have been dominated by the news that real estate titans Zillow and Trulia are merging after Zillow purchased Trulia for $3.5 billion. The two largest home listing sites account for nearly half of all home listings’ web traffic.

Shaun Graham, Vice President of Southeast Mortgage

Shaun Graham, Vice President of Southeast Mortgage

Realtors across the nation expressed their concerns that the merge would eliminate their role in the home buying and selling process. After all, the founders started Zillow after leaving Expedia where they severely decreased the need for travel agents. This week, we weighed in on housing and company experts that revealed Realtors and the rest of the industry need not to be threatened.

Zillow’s in the ad business

Zillow makes the majority of their revenue from their “Marketplace” revenue stream, which includes advertising from Realtors, banks, mortgage brokers and brokerage firms. Since announcing the merge, Zillow executives have wanted to make clear that they are in the advertisement business, not the business of selling homes or stepping on Realtors’ toes.

“We’ve never wanted to become a real estate brokerage,” stated a Zillow representative in Time’s “What a Zillow/Trulia Merger Might Mean For Consumers.”

In the Zillow press release announcing the merge, a summary of the expected benefits included broader distribution for “home sellers and their agents, brokerages and participating MLSs…[to] benefit from seamless free distribution of listings across even more platforms to reach an even larger audience of consumers.”

Thus, it seems that advertisements and connecting Realtors to consumers will only be improved. The merge is looking to be a win/win for Zillow and Realtors, as Zillow will spend even more capital now on advertising while Realtors will get more targeted buyers.

Computers Can’t Replace Human Emotion

The Wall Street Journal pointed out that buying a home is an extremely emotional process. A computer can’t provide all the necessary reassurance. There will always be a need for Realtors to provide support through one of the biggest financial deals of one’s life.

“In real estate, there will always be a practioner in the middle of a transaction, helping consumers with an infrequent, complex and emotional transaction,” said Spencer Rascoff, Zillow CEO in The Wall Street Journal.

Some analysts even believe that Zillow and Trulia listings’ effects are overhyped and that neither company has changed the game much.

“They already have vast consumer traffic yet very little has changed in terms of their lead quality, lead volume or even the underpinnings of how the residential real estate industry works and that’s because at the end of the day, 80 to 98 percent of residential real estates are chosen based on referrals,” said Analyst Bradley Safalow of PAA Research to CNBC.

Other noted benefits from the press release include enhanced value and ROI for advertisers, faster innovation on mobile and web, greater access to free real estate market data for consumers and much more. Though the negative effects continue to loom in professionals’ minds, the merge has much more potential to have positive reverberations throughout the real estate industry.

Posted in Uncategorized | Tagged , , , , , , | Leave a comment

While Inventory is Down, Increase Your Competitive Edge

The most recent Beige Book, the Federal Reserve’s comprehensive look at current economic conditions in 12 U.S. districts, revealed positive economic activity in many Atlanta economic sectors including travel, tourism, commercial real estate, manufacturing – and residential real estate! Despite increased home sales and construction levels, low inventory is continuing to negatively affect the industry. To avoid aggressive, ugly bidding wars, hopeful buyers need to sharpen their competitive edge to be more appealing to sellers. Having a few charming and financial (while ethical) savvy tricks up your sleeve can help you land your dream home.

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

Cash is King

According to McClatchy data, paying in cash for home sales is more popular than ever. Prior to 2008, less than 10 percent of home sales were in cash. Today, it’s at 33 percent. Cash is an efficient route for sellers who don’t have to wait on a buyer to gather a down payment or gain mortgage approval. Sellers will pick the most hassle free option among fiercely competitive bidders. So if you have the means, consider offering cash.

Come Qualified

If you don’t have the means or feel safe offering thousands of dollars in cash, gain pre-approval for a mortgage. By having a pre-approval letter, sellers and Realtors know that you’re serious, thus they are more assured they won’t be wasting their time on you, and should you accept the offer, there is a higher chance of successful closing on the home. To gain pre-approval, the buyer will need to provide financial information such as W2 statements, federal tax returns, bank statements and more. While a seemingly lengthy process, you’ll have to gather proof of all these documents to apply for a mortgage anyways.

Stay a Step Ahead

Just last month, Zillow announced Coming Soon ­– a sneak-peek feature that will allow hopeful homebuyers to preview homes that are not yet on the market, but are expected to be listed within a month. Buyers and Realtors that find a property they’re interested in on Coming Soon will be able to contact listing agents directly. The platform is designed to help buyers in areas of inventory crunch and sellers who are hoping to sell their home quickly.

“By offering a glimpse into a market’s future housing inventory, home shoppers can rest assured they have the broadest possible view of the local market to find the right home, and sellers can feel confident their home is being marketed as widely as possible,” said Jeremy Wacksman, vice president of marketing and product management at Zillow.

Appeal to Emotions

Using emotions as a viable mode of persuasion stems all the way back to Aristotle’s use of ethos in 350 B.C. A modern day model from Zillow recommends writing a personal, handwritten letter of emotional appeal to the homeowners of homes that you’re interested in. If there are multiple offers on a property it wouldn’t hurt to let the owner know why the home is so important to you, if it evokes memories from your childhood home or why the home is so perfect for your family.

Posted in Uncategorized | Tagged , , , , , , , , | Leave a comment

Looking For A Home? Look To Your Phone

In February, we revealed the top home improvement and maintenance applications for smartphones, computers and tablets. In addition to improving your own home, there are dozens of apps that can aid in the selling and buying process. As the inventory crunch eases, we discuss the best real estate apps that can make your home search more efficient, fun and less stressful.

Jeff Brown, Senior Vice President of Southeast Mortgage

Jeff Brown, Senior Vice President of Southeast Mortgage

Trulia

The online residential real estate site Trulia has four free apps in the App Store and on Google Play to aid in many aspects of real estate for renters, buyers and Realtors.

  • Trulia Real Estate allows you to search for homes, apartments or open houses on this top-rated app while you’re pumping gas, on the treadmill or watching television. Each home comes with a fact sheet of property information and vivid photographs. Interactive maps give alerts when a new home comes on the market, provides local information such as school zones and crime, allows you to save homes, connects users to agents and much more.
  • Trulia Rentals works the same way as Trulia Real Estate with rental properties.
  • Trulia for Agents points agents to prospective buyers and sellers and allows agents to close a deal from anywhere.
  • Trulia Mortgage’s easy-to-use mortgage app provides extensive financial insight into the complex mortgage process. Users can use the affordability calculator to determine which home price they can afford, view a refinancing calculator and use a mortgage calculator that will break down monthly payments factoring in interest, property taxes and insurance.

Homesnap

Homesnap is a creative, social and easy way to receive real estate information when looking to purchase a home. The free app was recently named “Best Mobile Tool” by Realtor Magazine and “Most Addictive Real Estate App” by HGTV Magazine. Though the Internet is filled with thousands of online listings, many people still prefer driving around in their preferred areas looking for red for-sale signs. Using the Homesnap app, powered by real-time MLS listings, users snap a photo of a home and are then greeted with valuable information like home values, interior photos, property taxes and school information. If users aren’t in front of a home, they can also browse through for-sale homes in the directory.

An innovative aspect of Homesnap is the ability to have a network of friends to collaboratively come together to assist in your search process. Every time a friend saves a home or writes a comment, the action gets sent to your newsfeed.

Credit Karma

With today’s tight lending restrictions, having a good credit score is more important than in past years. The free, simple Credit Karma app provides an estimated score from TransUnion, without entering any credit card information, unlike other credit-checking platforms. Using the score, you can determine if you qualify for a loan, at which rate and for how much. An additional bonus of Credit Karma is users can see problem areas in their credit and be able to dispute it before meeting with a mortgage lender. Another feature is free credit monitoring where users can receive daily notifications of important changes to their credit report.

Posted in Uncategorized | Tagged , , , , , , , , , | Leave a comment

Don’t Skip Over Summer Renovations

Even though home repairs and construction is the last thing many Atlantans want to do in the scorching “Hotlanta” summer, completing home renovations can provide immediate gratification, such as saving money and increasing comfort, as well as providing long-term benefits, like increasing the resale value of your home.

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

According to Forbes, many renovations are generally cheaper in the summer than other times of the year because of the increase in availability of contractors and an overall decrease in demand. Many people choose to refrain from doing renovations in the summer while children are out of school or while on vacation, leaving greater availability of less-expensive labor and an opportunity to negotiate a better deal.

If you are considering venturing into a renovation this summer, here’s a few that are best completed during the summer and they may cost you less in the long run:

Driveway Paving

Summer is known for being the best time to repave an old driveway where weeds are poking through and cracks seem to be expanding with each passing day.   Asphalt is easier to work with in higher temperatures; giving contractors more time to evenly smooth the asphalt and avoid costly re-dos.

A word of caution … Because summer is such a popular time to repave driveways, there are many contracting scammers that will leave you with a subpar pavement job and, when the job is done, no way of contacting them. It’s not unusual to find scammers selling door-to-door luring customers with “too good to be true” prices and cash-only sales. Always check with the Better Business Bureau to learn more about a contractor’s legitimacy.

Kitchen

Out of all home renovations, kitchens often yield one of the highest returns on investment when it comes time to selling your home as kitchens are one of the first things people look at when judging a home. However, kitchen renovations oftentimes leave you without the use of your kitchen for a few weeks, meaning more meals out and expensive restaurant bills. Fortunately, you can take advantage of the warm summer weather and move the kitchen outside! Move your refrigerator to the garage and utilize a grill to cut down on restaurant bills.

Landscaping

Contrary to popular belief, you can landscape successfully during summer. Nurseries often lower their prices on leftover plants from the spring season, the most popular time to landscape. Many homeowners find they save money on groceries by being able to pluck fresh fruits, vegetables and herbs from their very own garden.

If you already have a lush garden, the summer season is a perfect time to install an automatic sprinkler system allowing you to save time, money and water. Another great summer project is to install solar powered lights on outdoor fixtures, which can save money while accentuating walkways.

In-Ground Pool

Though you won’t save any money by installing an in-ground pool during peak season, installing one during the warm months is a necessity. The ground has to be thoroughly thawed before digging can begin. Start this project in the spring so you can finish it before the hot summer hits.  Forbes recommends finding a neighbor that is also interested in building a pool to possibly cut a deal with a contractor.

“Since pools are constructed in stages, it’s more efficient and less costly to a contractor to simultaneously build more than one,” said Forbes. “The savings could be applied to installing a new deck area around the pool.”

When you’re mapping out your home improvement schedule, keep in mind that seasonal improvements are likely to be more expensive during peak season. To save money, take advantage of the off-season by fixing air conditioning units and building patios in the colder seasons and working on attic insulation in the warmer months.

Posted in Uncategorized | Tagged , , , , | Leave a comment

Atlanta Residential Real Estate Index Hits Record High With Across the Board Housing Improvements

Amid the summer heat, real estate in Atlanta is sizzling. Last month, the Cal-Culator, Atlanta’s residential real estate index, reached the previous record of 6.0. This month, the June index has climbed to a record high of 6.2 due to across the board improvements in home sales, builder confidence, home prices, increased inventory, foreclosures and more.

The June Cal-Culator

The June Cal-Culator

Home Sales

Pending, new and existing home sales all   saw  strong improvements in May. Existing-home sales rose 4.9 percent, with attributions to rising inventory levels, the improving job market and declining mortgage rates. Pending home sales rose “sharply” 6.1 percent, the largest increase since April 2010 when first-time homebuyers scrambled to sign contracts before a lucrative popular tax credit ended, according to the National Association of Realtors.

New-home sales posted an even stronger rebound with a nearly 19 percent increase from last month, the highest rate since May 2008, according to data released by the U.S. Department of Housing and Urban Development with the U.S. Census Bureau.

“These numbers are in line with our recent builder surveys, which indicate that more consumers are getting off the fence and coming back into the marketplace,” said Kevin Kelly, chairman of the National Association of Home Builders.

Home prices

RealtyTrac reported that the median sales price of distressed and non-distressed U.S. residential properties rose 6 percent in May from the previous month and 13 percent from a year ago, the second consecutive month in a row with a double-digit annual increase and the biggest annual increase since prices bottomed out in March 2012.

Builder Confidence

New data from the NAHB and Wells Fargo Housing Market Index showed that builder confidence for new single-family homes rose to only one point shy of the threshold of what’s considered good building conditions. The index rose four points to a level of 49. Any number over 50 indicates the majority of homebuilders view conditions as “good” rather than “poor.”

“After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,” said Kelly.

Foreclosures

Foreclosure levels in Atlanta have continued the downward trend that has permeated the real estate industry in 2014. Foreclosures in June dropped to levels not seen since 2002. The Atlanta Journal-Constitution reported on data from Kennesaw’s Equity Depot that 2,054 foreclosures were reported in June across 13 Atlanta counties, compared to 11,016 during the height of the housing crisis.  The Northeast and West aren’t faring as well, however, as foreclosure levels skyrocketed in May, according to Housing Wire.

Stay tuned as we release the next Cal-Culator on August 5 to see if Atlanta’s residential real estate numbers continue on their current path of rebound.

Posted in The Cal-Culator | Tagged , , , , | Leave a comment

Who are Millennial Homebuyers?

Last week, we discussed why homeownership has been a cornerstone of the American Dream for decades. This week, we discuss how the next generation behind the Baby boomers is affecting the real estate market and how they’re learning to adjust to homeownership. Though millennials, often classified as those born between 1980 and 2000, are changing jobs more than ever, getting married later in life and graduating with more debt, Gen Y is still interested in taking part in the American dream of buying a home. We offer insight into the new demographic along with some advice for those millennials that may not be quite sure how to handle homeownership among the pressures of the recession.

Shaun Graham, Vice President of Southeast Mortgage

Shaun Graham, Vice President of Southeast Mortgage

What do millennials want in a house?

A Trulia consumer survey with millennials indicates that 68 percent of homebuyers are looking to buy a home under $200,000. In the past, many home buyers believed that “bigger was better,” however, with the current economy, millenials are seeking out more practical homes that fit within their budget and their lifestyle.  A National Association of Realtors’ Home Buyer and Seller Generational Trends Report reported the typical first home purchase for a millennial is a 1,800-square-foot house costing $180,000 that they plan to stay in for 10 years. When it comes to environmentally friendly features, millennials put more emphasis on commuting costs than previous generations, though only a minority is likely to live in a city, according to the report.

Why are millennials buying homes?

Though the economy is working against millennials as student debt topples nearly $1 trillion (more than credit card and automobile debt), millennials are still remaining hopeful about buying homes. A Western Union poll  found almost half of people aged 21-33 are planning to buy a home within the next five years. Young buyers are more likely to move for job relocation or wanting to upgrade to a larger living space. On the opposite end of the spectrum, unsurprisingly, older generations are looking for a smaller home or want to be closer to family and friends.

So what’s holding millennials back?

The NAR report revealed 56 percent of respondents cited student loan debt as the biggest obstacle between them and homeownership, despite market rumors that say millennials simply aren’t interested in homeownership.

What’s some advice for millennials looking to purchase a home?

Don’t go at it alone. There are countless resources to aid you in the process that millions have done before you. Though the Internet is a beacon of knowledge with seemingly unlimited listings and advice (such as this!), the Internet is no substitute for a Realtor. Realtors provide years of real estate experience that will come in handy in terms of finding the best homes, negotiating, contracts and more.

Zillow’s “5 Tips for Millennial Home Buyers” recommends that millennials ask the best resource around for advice: parents.

“They have been through the market before and can add value to the home search,” said the article. “They may be out of touch with social media and the technology available in the home buying process, but they likely have a solid financial opinion.”

Posted in from the Desk of Shaun Graham | Tagged , , , , , , | Leave a comment

Why Homeownership Matters

One of the most admired and sought-after cornerstones of the “American dream” is homeownership, which is viewed as an extension of economic prosperity and security. For decades, families have worked hard to strive and have a place to call their own. Research consistently shows that owning a home has significant positive correlations in social behavior such as increased civic participation, higher test scores in children and better health as well as tangible financial benefits including increased equity and tax deductions.

J.D. Crowe, President of Southeast Mortgage

J.D. Crowe, President of Southeast Mortgage

Social Benefits

Many academic studies provide evidence that homeownership has a positive impact on health and self-worth, even after controlling factors such as income and education that would undoubtedly result in better health. A study titled “The Effects of Homeownership on Self Esteem, Perceived Control, and Life Satisfaction of Low Income People” found that low-income individuals who became homeowners reported higher life satisfaction, self-esteem, health and perceived control over their lives.

Other research studies show that crime decreases in neighborhoods that are predominately comprised of homeowners. The threat of financial loss and having a sense of permanency in the neighborhood creates more incentive to deter crime by taking proactive measures such as implementing neighborhood watch programs. As a result, lower crime is reported in such neighborhoods.

The positive effects of homeownership are arguably the most evident in children. Habitat for Humanity reported that the children of homeowners, compared to children of renters, are:

  • 25 percent more likely to graduate from high school
  • 116 percent more likely to graduate from college
  • 20 percent less likely to become teen mothers
  • Save taxpayers an estimated $34,000 in public expenditures, such as the cost of juvenile delinquency and teenage pregnancy services

Economic Benefits

The economic benefits of homeownership are evident year around, not just during tax season where homeowners can claim deductions on home improvement loans, home office use and energy-efficient upgrades. By making mortgage payments, sometimes referred to as “forced savings,” you increase your home’s equity – the amount of the house you truly own. By owing less on your mortgage, you own a little more of the house. Rather than improving your landlord’s equity as a renter, you’re increasing your own equity and assets.

Not only is homeownership beneficial to individuals, their families and communities, it’s also vital to the U.S. economy as the housing sector accounts for 15 percent of total economic activity in the country. Because of all the benefits, homeownership should continue to be revered and preserved in the U.S.

“In general research supports the view that homeownership brings substantial social benefits. Because of these extensive social benefits – what economists call positive externalities – policies that support sustainable homeownership are well justified,” according to the National Association of Realtors’ “Social Benefits of Homeownership and Stable Housing” research.

Posted in From the Desk of J.D. Crowe | Tagged , , , , , , | Leave a comment

Why Waiting to Buy a Home Could Cost You

Are you thinking about waiting to purchase a home?  Think again. According to many experts, timing is everything and those who wait could lose out on an opportunity of a lifetime. For many consumers, the stars are aligning to purchase a new home due to historically low mortgage rates, warmer weather giving way to a busier home buying season and the fact that buying is still traditionally cheaper than renting. However, these factors are shifting and missing out on homeownership now could cost you in the long run.

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

Interest Rates Won’t Stay Low Forever

Though interest rates have crept up slowly this year, they have still remained historically low. However, a recent forecast by the Mortgage Bankers Association predicts that rates for a 30-year-fixed mortgage is expected to rise to 5 percent by the fourth quarter of this year and 5.3 percent by the end of next year.

Although that doesn’t sound like much of a jump, a rise in as little as a quarter of a percentage point can mean  $100 extra per month in mortgage payments. According to Yahoo! Homes, the expected rise is because the feds will begin raising rates six months after they stop purchasing mortgage bonds, which is expected to happen next year.

Unbeatable Spring and Summer Season

The sluggish winter has finally given way to the more lucrative spring and summer seasons, typically the busiest time in the real estate industry for buyers and sellers.   Traditionally, most people avoid listing their home during the brutal winter season and instead opt to put their home on the market during the summer when kids are of out school, making it easier to move.  Therefore, if you want the largest selection of inventory to select your dream home, warm months are your best bet.

“People just know that there are most listings coming in the spring,” said Lawrence Yun, chief economist for the National Association of Realtors.

Buying is Still Cheaper than Renting

Throughout the majority of the country, buying has traditionally been cheaper than renting. According to Zillow, homeownership is currently cheaper in all of the 100 largest metro areas. A recent breakeven horizon analysis from the online real estate database found that nationally the breakeven horizon is only 2.1 years. In other words, after 2.1 years homeowners begin to have more money and assets than they would if they had rented the same home for the same time period.

“Many renters may ask themselves why renew a lease, when you can break even on the same home in less time in many areas,” said Zillow Chief Economist Dr. Stan Humphries.

So why buy now? It’s more affordable to buy a home today than it has been in decades, however, the market is beginning to shift which means homebuyers need to act quickly. The gap between renting and buying is decreasing as a result of rising mortgage rates and rising home prices. Currently buying is on average 38 percent cheaper than renting, although it was 44 percent cheaper last year. With homeownership linked to a host of benefits including creating equity and stability, those who are thinking about homeownership should consider taking the plunge during this period of high affordability.

Posted in From the Desk of Kathy Gyselinck | Tagged , , , , , , , , | Leave a comment