2015: The Year of the First-Time Homebuyer

For the past several years the first-time homebuyer has been all but absent from the housing market.  With high unemployment for younger workers and restrictive and ambiguous mortgage credit policies, many millennials have stayed out of the housing market.  But, that could all change in 2015.  It appears the landscape is perfect for the return of the first-time homebuyer.   Here are the key factors that will help the first-time homebuyers in 2015:

Low Interest Rates
Mortgage rates have fallen over the last several weeks to near-historic lows – helped by the plummeting price of oil.  While interest rates are still projected to rise through the end of 2015, for now they are extremely low, making housing affordable.

Improving Employment
More jobs were created in 2014 than in any other year since 2000.  And, employment for younger households had an even better year – the economy created the most civilian jobs for the 25-34 age range (an important group for first-time homebuyers) since 1987!  Now that more millennials are working, they can afford to get out of mom & dad’s basement.

New Fannie Mae/Freddie Mac Programs
Both Fannie Mae & Freddie Mac have introduced mortgage programs geared toward the first-time homebuyer that requires only a 3% down payment.  Down payments are often a barrier for would-be first-time homebuyers and this program will help out with that.  Fannie Mae’s program is already available with Freddie Mac’s program set to begin in March 2015.

FHA Lowers Mortgage Insurance Premium
FHA announced that effective January 26, 2015, the mortgage insurance premium on a 30 year fixed rate mortgage will be reduced by 0.50% - from 1.35% - 0.85%.  According to the National Association of Realtors, this will save the average homebuyer almost $1,000/year.

Down Payment Assistance Programs
Many states offer down payment assistance programs.  In Illinois, the Illinois Housing Development Agency offers several down payment assistance program for first-time homebuyers.
 
2015 will be a great year for all homebuyers, but especially the first-time homebuyer.  Give me a call today to make sure you are mortgage-ready.  I can pre-qualify you for your mortgage and even refer you to a great Realtor to find your dream home!  Contact me at BarkerLoans@gmail.com or 708.473.7688.
 
It’s also a great time to refinance – low rates, increasing property values and lower FHA mortgage insurance premiums make now an excellent time to save some money on your current mortgage!

New Home Sales at 6 Year High

Even though the housing recovery remains fragile, the good news is that single family home sales have reached a six-year high. Sales of new homes rose slightly in September, making it the highest since 2008. The Commerce Department announced that sales increased 0.2%. One reason for the increase in sales may be that the median price of a new home fell four percent from the previous year. This is the lowest it’s been since August 2013. The median price for a new home is currently $259,000.

The sales of new homes has fluctuated throughout the country, with the highest jump in the Midwest. Sales rose 12.3% in this area. They rose two percent in the South, were stagnant in the Northeast, and actually fell in the West. The trend also seems to be toward smaller homes once the cooler seasons start. Homes under $199,999 increased while the sale of properties from $300,000 to $499,999 decreased. New home sales account for a small portion of the overall home sales, with approximately 8% of the total housing market. With sales rising, however, this in turn has been a boost to the stock market. Stock for new houses went up 1.5%, the highest level since July 2010.

Since new home sales tend to be volatile, it helps to look at the big picture to get an idea where the market is heading. In the third quarter of this year new home sales were up by 15% from the same time period in 2013. While we’re still a long way from the pre-recession peak of 1.3 million new home sales, there is reason for optimism. Builder confidence continues to rise and credit is beginning to flow again.

When you're ready to purchase a home, please contact me at barkerloans@gmail.com or 708.473.7688.

Don't Wait - Now is the Time to Buy

With interest rates still at historically low levels now is a great time to purchase a home.  But, with employment increasing, rising home prices, and projected interest rate increases in the near future, waiting could cost you.

The National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) are two organization that measure and track home affordability over time.  Both the NAR's Home Affordability Index and NAHB's Housing Opportunity Index are showing the cost of purchasing a home is starting to rise, affecting affordability negatively.

According to NAHB’s Chief Economist David Crowe,  “The second quarter HOI reflects the slow but steady march toward the historic levels of price appreciation and interest rates that result in affordability levels we experienced before the mid-2000s boom.”

And, Michael Hyman, Research Assistant at NAR said,  “At the national level, housing affordability is down for the month of June due to higher prices and qualifying income levels despite the lowest mortgage rates of the year.”

So, even though you missed the very bottom of the real estate market, interest rates are still remarkably low and home prices in most areas are still below the levels they were seven years ago.  It is still a great time to purchase a home.

Contact me to find out how much home you can afford and what it will cost you at BarkerLoans@gmail.com or 708.473.7688.

Increase in Home Prices Continues to Slow

Home prices increased 9.3%, year-over-year, according to the S&P Case-Shiller Home Price Index.  This is down significantly from the previous month's increase of 10.6%.

In the month of May the 20-City Composite Index showed a monthly increase of 1.1% with all 20 cities showing gains.  The Chicago market posting an increase of 1.5%.

While home prices are still rising, the rate of increase in the slowest since February 2013.  The broader economy, especially employment, is showing larger improvement.

For questions, or to find out how these home price gains affects affordability, please contact me at BarkerLoans@gmail.com.