Categories
First Time Home Buyers For Buyers Rent vs. Buy

A Homeowner’s Net Worth Is 40x Greater Than a Renter’s

A Homeowner’s Net Worth Is 40x Greater Than a Renter’s | Simplifying The Market

One of the best ways to build your family’s financial future is through homeownership. Recent data from the Federal Reserve indicates the net worth of a homeowner is actually over 40 times greater than that of a renter. Maybe it’s time to start thinking about buying a home, especially when they’re so affordable in today’s market.

Every three years the Survey of Consumer Finances shows the breakdown of how owning a home helps build financial security. In the graph below, we see that the average net worth of homeowners continues to grow, while the net worth of renters tends to hold fairly steady and be significantly lower than that of homeowners. The gap between owning and renting just keeps getting wider over time, making homeownership more and more desirable for those who are ready.A Homeowner’s Net Worth Is 40x Greater Than a Renter’s | Simplifying The Market

Owning a home is a great way to build family wealth.

For many families, homeownership serves as a form of ‘forced savings.’ Every time you pay your mortgage, you’re contributing to your net worth by increasing the equity you have in your home (See chart below):A Homeowner’s Net Worth Is 40x Greater Than a Renter’s | Simplifying The MarketThe impact of home equity is part of why Gallup reports that Americans picked real estate as the best long-term investment for the seventh year in a row. According to this year’s survey, 35% of Americans chose real estate over stocks, savings accounts, gold, and bonds.

Today, there are great opportunities available for those planning to buy a home. The housing market has made a full recovery, and all-time low interest rates are giving homebuyers a big boost in purchasing power. If you’re ready, buying a home this fall can set you up to increase your net worth and create a safety net for your family’s future.

Bottom Line

To learn how you can use your monthly housing cost to build your family’s net worth, let’s connect so you have a trusted professional to guide you through the homebuying process.

Categories
First Time Home Buyers For Buyers Interest Rates Move-Up Buyers Pricing

The Cost of a Home Is Far More Important than the Price

The Cost of a Home Is Far More Important than the Price | Simplifying The Market

Housing inventory is at an all-time low. There are 39% fewer homes for sale today than at this time last year, and buyer demand continues to set records. Zillow recently reported:

“Newly pending sales are up 25.5% compared to the same week last year, the highest year-over-year increase in the weekly Zillow database.”

Whenever there is a shortage in supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. CoreLogic’s latest Home Price Index reports that values have increased by 5.5% over the last year.

This is great news if you’re planning to sell your house; on the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. However, purchasers should realize that the price of a house is not as important as the cost. Let’s break it down.

There are several factors that influence the cost of a home. The two major ones are the price of the home and the interest rate at which a buyer can borrow the funds necessary to purchase the home.

Last week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.87%. At this time last year, the rate was 3.73%. Let’s use an example to see how that difference impacts the true cost of a home.

Assume you purchased a home last year and took out a $250,000 mortgage. As mentioned above, home values have increased by 5.5% over the last year. To buy that same home this year, you would need to take out a mortgage of $263,750.

How will your monthly mortgage payment change based on today’s lower mortgage rate?

This table calculates the difference in your monthly payment:The Cost of a Home Is Far More Important than the Price | Simplifying The MarketThat’s a savings of $61 monthly, which adds up to $732 annually and $21,960 over the life of the loan.

Bottom Line

Even though home values have appreciated, it’s a great time to buy a home because mortgage rates are at historic lows.

Categories
First Time Home Buyers For Buyers Infographics Move-Up Buyers

Virtual School Is Changing Homebuyer Needs [INFOGRAPHIC]

Virtual School Is Changing Homebuyer Needs [INFOGRAPHIC] | Simplifying The Market

Virtual School Is Changing Homebuyer Needs [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • With remote learning sweeping the nation this academic year, organized spaces with enough room for kids to learn effectively are high on buyer wish lists.
  • If you’re trying to make room for your family’s growing needs, multi-purpose rooms and dedicated workspaces may be features to consider in your next home.
  • Let’s connect today so you can find a home where your kids feel confident and comfortable too.
Categories
First Time Home Buyers For Buyers Infographics Interest Rates Move-Up Buyers

Mortgage Rates & Payments by Decade [INFOGRAPHIC]

Mortgage Rates & Payments by Decade [INFOGRAPHIC] | Simplifying The Market

Mortgage Rates & Payments by Decade [INFOGRAPHIC] | Simplifying The Market

Some Highlights

  • Sometimes it helps to see the dollars and cents you’ll save when you purchase a home while mortgage rates are low.
  • Today’s low rates mean it’s less expensive to borrow money, so the savings over the life of your loan is significant.
  • Let’s connect to determine the best way to position your family for a financially-savvy move in today’s market.
Categories
First Time Home Buyers For Buyers Interest Rates Move-Up Buyers Pricing

Homes Are More Affordable Right Now Than They Have Been in Years

Homes Are More Affordable Right Now Than They Have Been in Years | Simplifying The Market

Today, home prices are appreciating. When we hear prices are going up, it’s normal to think a home will cost more as the trend continues. The way the housing market is positioned today, however, low mortgage rates are actually making homes more affordable, even as prices rise. Here’s why.

According to the Mortgage Monitor Report from Black Knight:

“While home prices have risen for 97 consecutive months, July’s record-low mortgage rates have made purchasing the average-priced home the most affordable it’s been since 2016.

How is that possible?

Black Knight continues to explain:

“As of mid-July, it required 19.8% of the median monthly income to make the mortgage payment on the average-priced home purchase, assuming a 20% down payment and a 30-year mortgage. That was more than 5% below the average of 25% from 1995-2003.

This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period.

In fact, buying power is now up 10% year-over-year, meaning the average home buyer can afford nearly $32,000 more home than they could at the same time last year, while keeping their monthly payment the same.”

This is great news for the many buyers who were unable to purchase last year, or earlier in the spring due to the slowdown from the pandemic. By waiting a little longer, they can now afford 10% more home than they could have a year ago while keeping their monthly mortgage payment unchanged.

With mortgage rates hitting all-time lows eight times this year, it’s now less expensive to borrow money, making homes significantly more affordable over the lifetime of your loan. Mark Fleming, Chief Economist at First American, shares what low mortgage rates mean for affordability:

“In July, house-buying power got a big boost as the 30-year, fixed mortgage rate made history by moving below three percent. That drop in the mortgage rate from 3.23 percent in May to 2.98 percent in July increased house-buying power by nearly $15,000.”

The map below shows the last time homes were this affordable by state:Homes Are More Affordable Right Now Than They Have Been in Years | Simplifying The MarketIn six states – Arkansas, Iowa, Kentucky, Louisiana, Maryland, and West Virginia – homes have not been this affordable in more than 25 years.

Bottom Line

If you’re thinking of making a move, now is a great time to take advantage of the affordability that comes with such low mortgage rates. Whether you’re thinking of purchasing your first home or moving into a new one and securing a significantly lower mortgage rate than you may have on your current house, let’s connect today to determine your next steps in the process.