Keys to Success for First-Time Homebuyers

Buying your first home is an exciting decision and a major milestone that has the power to change your life for the better. As a first-time homebuyer, it’s a vision you can bring to life, but, as the National Association of Realtors (NAR) shares, you’ll have to overcome some factors that have made it more challenging in recent years:   “Since 2011, the share of first-time home buyers has been under the historical norm of 40% as buyers face tight inventory, rising home prices, rising rents and high student debt loads.” That said, if you’re looking to purchase your first home, here are two things you can consider to help make your dreams a reality. Save Money with First-Time Homebuyer Programs Being able to pay for the initial costs and fees associated with homeownership can feel like a major hurdle. Whether that’s getting a loan, being able to put together a down payment, or having money for closing costs – there are a variety of expenses that can make buying your first home feel challenging.  Fortunately, there are a lot of public and private first-time homebuyer programs that can help you get a loan with little-to-no money upfront. CNET explains:   “A first-time homebuyer program can help make homeownership more affordable and accessible by offering lower mortgage rates, down payment assistance and tax incentives.”  In fact, as Bankrate says, many of these programs are offered by state and local governments:   “Many states and local governments have programs that offer down payment or closing cost assistance – either low-interest-rate loans, deferred loans or even forgivable loans (aka grants) – to people looking to buy their first house . . .”  To take advantage of these programs, contact the housing authority in your state and browse sites like Down Payment Resource. The Supply of Homes for Sale Is Low, So Explore Every Possibility It’s a sellers’ market, meaning there aren’t enough homes on the market to meet buyer demand. So, how can you be sure you’re doing everything you can to find a home that works for you? You can increase your options by considering condominiums (condos) and townhomes. U.S. News tells us these housing types are often less expensive than single-family homes:   “Condos are usually less expensive than standalone houses . . . They are also less expensive to insure.” One reason why they may be more affordable is because they’re often smaller. But they still give you the chance to get your foot in the door and achieve your dream of owning and building equity. Beyond that, another major perk is they typically require less maintenance. As U.S. News says in the same article:   “The strongest reason for purchasing a condo is that all external maintenance is usually covered by the condo association, such as landscaping, pool maintenance, external painting, paving, plowing and more. This fee also covers some internal maintenance, such as gas, electric, plumbing, HVAC and other mechanical systems.”  Townhomes and condos are great ways to get into homeownership. Owning your home allows you to build equity, increase your net worth, and can fuel a future move. The best way to make sure you’re set up for success, especially if you’re just starting out, is to work with a trusted real estate agent. They can educate you on the homebuying process, help you understand your local area to find options that are right for you, and coach you through making an offer in a competitive market. The Bottom Line Today’s housing market provides some challenges for first-time homebuyers. But, there are still ways to achieve your goals, like utilizing first-time homebuyer programs and considering all of your housing options. Connect with us so you have an expert on your side who can help you navigate the process.

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Today’s Real Estate Market: The ‘Unicorns’ Have Galloped Off

Comparing real estate metrics from one year to another can be challenging in a normal housing market. That’s due to possible variability in the market making the comparison less meaningful or accurate. Unpredictable events can have a significant impact on the circumstances and outcomes being compared.  Comparing this year’s numbers to the two ‘unicorn’ years we just experienced is almost worthless. By ‘unicorn,’ this is the less common definition of the word: “Something that is greatly desired but difficult or impossible to find.”  The pandemic profoundly changed real estate over the last few years. The demand for a home of our own skyrocketed, and people needed a home office and big backyard.  Waves of first-time and second-home buyers entered the market. Already low mortgage rates were driven to historic lows.  The forbearance plan all but eliminated foreclosures. Home values reached appreciation levels never seen before. It was a market that forever had been “greatly desired but difficult or impossible to find.” A ‘unicorn’ year. Now, things are getting back to normal. The ‘unicorns’ have galloped off.  Comparing today’s market to those years makes no sense. Here are three examples:  Buyer Demand  If you look at the headlines, you’d think there aren’t any buyers out there. We still sell over 10,000 houses a day in the United States. Of course, buyer demand is down from the two ‘unicorn’ years. But, according to ShowingTime, if we compare it to normal years (2017-2019), we can see that buyer activity is still strong (see graph below): Home Prices We can’t compare today’s home price increases to the last couple of years. According to Freddie Mac, 2020 and 2021 each had historic appreciation numbers. Here’s a graph also showing the more normal years (2017-2019): We can see that we’re returning to more normal home value increases. There were several months of minimal depreciation in the second half of 2022. However, according to Fannie Mae, the market has returned to more normal appreciation in the first quarter of this year. Foreclosures  There have already been some startling headlines about the percentage increases in foreclosure filings. Of course, the percentages will be up. They are increases over historically low foreclosure rates. Here’s a graph with information from ATTOM, a property data provider: There will be an increase over the numbers of the last three years now that the moratorium on foreclosures has ended. There are homeowners who lose their home to foreclosure every year, and it’s heartbreaking for those families. But, if we put the current numbers into perspective, we’ll realize that we’re actually going back to the normal filings from 2017-2019. Bottom Line There will be very unsettling headlines around the housing market this year. Most will come from inappropriate comparisons to the ‘unicorn’ years. A real estate professional is a great resource to help you keep everything in proper perspective.

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Owning a Home Helps Protect Against Inflation

You’re probably feeling the impact of high inflation every day as prices have gone up on groceries, gas, and more. If you’re a renter, you’re likely experiencing it a lot as your rent continues to rise. Between all of those elevated costs and uncertainty about a potential recession, you may be wondering if it still makes sense to buy a home today. The short answer is – it does. Here’s why.  Homeownership actually shields you from the rising costs inflation brings. Freddie Mac explains how:  “Not only will buying today help you begin to build equity, a fixed-rate mortgage can stabilize your monthly housing costs for the long-term even while other life expenses continue to rise – as has been the case the past few years.” Unlike rents, which tend to rise with time, a fixed-rate mortgage payment is predictable over the life of the mortgage (typically 15 to 30 years). And, when the cost of most everything else is rising, keeping your housing payment stable is especially important. The alternative to homeownership is renting – and rents tend to move alongside inflation. That means as inflation goes up, your monthly rent payments tend to go up, too (see graph below): A fixed-rate mortgage allows you to protect yourself from future rent hikes. With inflation still high, when your rental agreement comes up for renewal, your property manager may decide to increase your payments to offset the impact of inflation. Maybe that’s why, according to a recent survey, 73% of property managers plan to raise rents over the next two years.  Having your largest monthly expense remain stable in a time of economic uncertainty is a major perk of homeownership. If you continue to rent, you don’t have that same benefit and aren’t as protected from rising costs. SBottom Line A stable housing payment is especially important in times of high inflation. Connect with a real estate agent so you can learn more and start your journey to homeownership today.

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