Drop In Number Of First-Time Home Buyers Is Cause For Concern
The notion of buying your first home, building equity, and eventually moving up the property ladder is still something many young Americans aspire to, but between more stringent underwriting procedures, lingering student loan debt, competition from real estate speculatorsand higher interest rates, first-time buyers are being squeezed out of the market. According to the National Association of Realtors, first-time buyers have represented around 40% of home sales over the course of the last three decades, but in the last year, that has dropped to only 30%.
The simple fact is that it’s more difficult for first-time buyers to make that big-ticket purchase right now.
How about the fact that all home prices are way too inflated and the other fact that banks are not lending money as easily... But the main problem is prices are too high
When the first sentence in the real estate commercials claim there is a "shortage" of homes on the market, we know we are all being lied to... big time! I agree with 9:44, people are far smarter than the financial "gurus" that are running the dog and pony show at the FED and Wall St.
9:44 and 6:09.....check out the average rents in Salisbury. Why rent when a mortgage payment would actually be lower? The real problem is the requirements and guidelines to purchase have gotten much tighter. The fees that are associated with these type loans have been raised almost x2 since the housing collapse. The process and underwriting has become tougher.....but owning is still far better an investment and so much better for our communities.
Not quite true 6:56 because of taxes, insurance, water and sometimes HOA fees this could add close to or even more than $400 more a month in addition to the mortgage payments.
12:08 - you have to pay for taxes, insurance, water, etc. when you rent. The landlord pads it into the price you pay, or with utilities you pay it yourself directly. If the rent didn't cover the expenses, the landlord wouldn't be in the rental business.
There are houses you can buy in the area for $500-$600/mo that are renting for $1000-$1200 per month. It's really tough to save up for a house when you're giving all that extra money to a landlord. But it's stupid to put off buying a house if your alternative is to waste all that money on rent and you plan to stay in the area.
Getting in to the first house is the toughest hurdle. A mortgage gives a huge bump to the credit score and you can build up some equity quickly if you're putting a few hundred a month extra into your note by treating it like you are renting from yourself. That gives you enough equity and a better mortage rate so you can afford to trade up.
Combine the difference in rent with a bi-weekly mortgage payment to minimize interest and that house can be paid off in ~10 years. If it's nice enough, choose to own it payment free. Or rent it out and enjoy cash flow. Or sell the house and do it all over again on a larger home.
Also consider that there's a huge chance that we'll see hyperinflation as our currency is devalued. If the price of everything involved in maintaining a rental property goes up, you can bet that rent will, too. That fixed mortgage payment can help to hedge your exposure to this problem.
But the wealth effect is extremely powerful when you can earn a good cash flow on property and turn it into subsequent rentals that are more or less paid for by somebody else.
No one in their right mind would sign up for a 30 year debt when jobs are part time and low wage at best.
ReplyDeletePeople are not as stupid as our economic "experts" like Bernanke and the like are.
How about the fact that all home prices are way too inflated and the other fact that banks are not lending money as easily... But the main problem is prices are too high
ReplyDeleteWhen the first sentence in the real estate commercials claim there is a "shortage" of homes on the market, we know we are all being lied to... big time! I agree with 9:44, people are far smarter than the financial "gurus" that are running the dog and pony show at the FED and Wall St.
ReplyDelete9:44 and 6:09.....check out the average rents in Salisbury. Why rent when a mortgage payment would actually be lower? The real problem is the requirements and guidelines to purchase have gotten much tighter. The fees that are associated with these type loans have been raised almost x2 since the housing collapse. The process and underwriting has become tougher.....but owning is still far better an investment and so much better for our communities.
ReplyDeleteNot quite true 6:56 because of taxes, insurance, water and sometimes HOA fees this could add close to or even more than $400 more a month in addition to the mortgage payments.
ReplyDeleteMortgage rates inching up doesn't help things any.
ReplyDelete12:08 - you have to pay for taxes, insurance, water, etc. when you rent. The landlord pads it into the price you pay, or with utilities you pay it yourself directly. If the rent didn't cover the expenses, the landlord wouldn't be in the rental business.
ReplyDeleteThere are houses you can buy in the area for $500-$600/mo that are renting for $1000-$1200 per month. It's really tough to save up for a house when you're giving all that extra money to a landlord. But it's stupid to put off buying a house if your alternative is to waste all that money on rent and you plan to stay in the area.
Getting in to the first house is the toughest hurdle. A mortgage gives a huge bump to the credit score and you can build up some equity quickly if you're putting a few hundred a month extra into your note by treating it like you are renting from yourself. That gives you enough equity and a better mortage rate so you can afford to trade up.
Combine the difference in rent with a bi-weekly mortgage payment to minimize interest and that house can be paid off in ~10 years. If it's nice enough, choose to own it payment free. Or rent it out and enjoy cash flow. Or sell the house and do it all over again on a larger home.
Also consider that there's a huge chance that we'll see hyperinflation as our currency is devalued. If the price of everything involved in maintaining a rental property goes up, you can bet that rent will, too. That fixed mortgage payment can help to hedge your exposure to this problem.
But the wealth effect is extremely powerful when you can earn a good cash flow on property and turn it into subsequent rentals that are more or less paid for by somebody else.