Mason-McDuffie Mortgage Corporation » real estate

Is It a Good Time to Buy a House?

jmeussner@masonmac.com — Fri, 09 Dec 2022 00:02:26 +0000

Is It a Good Time to Buy a House?

This question is one of the most common questions we see from consumers, investors, real estate agents, and many others with interest in the real estate market. The answer is ‘yes’. But it also depends on your specific situation, what’s important to you, and where you are financially.

The reason the question “is it a good time to buy a house” comes up frequently today is because interest rates have risen substantially year over year, making the monthly payment rise for many people considering a home purchase. With these higher payments, many are wondering if it’s a bad time to buy a home, but it’s important to remember that with increasing rates has come a softening market – meaning buyer’s today are seeing both lower median home prices and reduced competition, allowing for seller concessions that weren’t widely available during the market craze of 2020-2021. So while payments might be higher today, total price tags may also be lower, allowing buyers to keep more money in the bank at closing time.

Median home prices in the US have come down from their 2021 highs

The other consideration many people have when asking ‘is it a good time to buy a house’ is what will happen with home values in the future. The real estate crash of 2010 is still fresh in a lot of minds, but it’s important to look at the economics of today’s market and compare them to the crash to see what’s likely to happen in the coming months.

One of the important considerations is one of the foundational aspects of economics and pricing – supply & demand. If you consider the US population has continued to increase and believe that means more people will require housing, the next place to look for a clue on where home values will go is to housing supply.

Housing inventory is far below the 2007 market peak

In the image below you can see that housing supply is far below the supply of homes that was on the market in 2007 preceding the crash in home values. While low inventory isn’t a guarantee of home price growth, in terms of supply and demand, the lack of inventory for a growing population should provide some support for home values and continued appreciation, even if that appreciation is slower than the abnormally high appreciation rates home owners saw in 2020 and 2021. It’s also important to note that real estate is very local, and some markets have more inventory than others, along with varying populations, so examining these numbers in your local market is important!

So interest rates are up, but it appears home values have some support. Interest rates also ebb and flow, so while you should never buy a home based on the hope that your payment will eventually get cheaper, that possibility does exist! If rates dip, refinance possibilities may exist for home owners to reduce their monthly mortgage payment, but this is no guarantee – it would just be a cherry on top for today’s would be home buyers. As you can see below, home prices have historically climbed on a consistent basis outside of the great recession over a decade ago, and for that reason home ownership has been a key metric in helping Americans establish wealth and grow their net worth. For many, the alternative (renting) doesn’t offer that same level of financial security.

Home values have climbed since 1975

So while we’re a mortgage company and home ownership is in our interest (pun intended), a look at the data supports home ownership being a great idea for those who can afford their monthly payment, and those who have the financial stability to consistently make a mortgage payment. The lack of inventory nationwide is good support for home values, and rising rates have diminished some demand, giving buyers more power and control in the purchase process than they’ve had in recent years.

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Is Affordable Housing Still Possible?

jmeussner@masonmac.com — Fri, 03 Dec 2021 03:41:14 +0000

Home prices are at all time highs! It’s a bubble! There’s a dip coming! It’s a terrible time to buy! These are some of the things headlines have been touting for….well, years now, as appreciation in the housing market has marched higher. And yes, home prices are up – much higher in some markets, than a few years back. If we look back even 5-6 years ago media pundits were sounding alarms on housing as if prices were doomed to drop at any moment. Those who have listened to those pundits have missed out on opportunities to accumulate a tremendous amount of wealth through housing. So with home prices moving so much so fast, the question remains – is housing still affordable?
Most consider this question by looking at one thing – price tags. Homes were $300,000 just a couple years ago and now they’re $400,000. In some markets, a nice home can’t be found for under a 7-figure price tag. What gives? OF COURSE, that’s unaffordable. Right ? If we look deeper into the data, economics, and look at what has happened in the broader picture since the last (very real) bubble we experienced (the “Great Recession”), things aren’t as they seem. In fact, the current market, high price tags and all, is a very affordable one. But how!?
One of the first things we need to look at is home prices vs average wages, because after all, “can you afford it” includes 2 pieces – how much does it cost? AND, how much do you have available to pay? On the surface, things still tend to point to things being unaffordable. Average wages since 2006 have come up 55%. Home prices have, on average, come up 41% during the same period. But in 2006, it’s important to remember average interest rates were north of 6% for conventional 30 year fixed rate mortgages. Today, rates are about half of that.
Why do rates matter? Because they directly influence payment, and the payment, not the entire price tag, is what you can “afford”. If I offer you $1 billion dollars on a loan you repay at $1/month, I think we can agree that a billion dollars is ‘affordable’. If I offer you $1 billion with a repayment of $100 million/month, not many people would think of that as affordable.

So let’s look at an example. In 2006, we’ll take a home worth $300,000.

Price: $300,000
Rate: 6%
Monthly Payment: $1,800

Household income: $6,000/month
% of monthly income that goes to the mortgage payment: 30%

Now let’s look at that same home in 2021

Price: $423,000 (up 41%)
Rate: 3%
Monthly payment: $1,783

Household income: $9,300 (up on average 55% since 2006)
% of monthly income that goes to the mortgage payment: 19%
These are the averages nationwide, and of course numbers will be different for every person, situation, and things vary by region, but on average, the market is about 11% more affordable today than it was in 2006.

Further, housing still has room to go – with supply lagging far behind demand and a generation of first time buyers coming of age, nearly all forecasts point to further home appreciation. Add in supply-chain issues, inflation, and many other metrics and signs point to affordable housing being a very realistic thing. That means today is a great time to buy, despite steep competition and high price tags. To see what options you have in your area, you can contact your MasonMac loan officer, or contact us with questions by asking an expert here!

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5 Things To Keep In Mind When Buying A Home During the Holidays

jmeussner@masonmac.com — Tue, 29 Oct 2019 19:27:58 +0000

Buying a home during the holidays offers more benefits than most people realize – less competition from other buyers who may be sitting on the sidelines, lower rates resulting from cyclical slowdowns in the economy, sellers more motivated to sell, and more opportunity to see a home at it’s worst – more problems are apparent during cold, snowy, or rainy seasons than when outside weather is dry and warm. All that said, there are certain hurdles and things to keep in mind when buying a home during the holidays or at any point toward the end of the year that buyer’s should be aware of.

Buying a home during the holidays is easier and more stress-free than most people realize

The Timeline

Anyone buying a home during the holidays should factor those holidays into their timeline, especially once they find a home and it’s time to structure a contract. Holidays mean banks (and lenders) are generally closed, staffs run a bit thinner as people take vacation and travel to be with family), and many one day holidays lead to more than single-day delays. For example, with Veteran’s Day on a Monday, many banks and lending operations will close early on the preceding Friday. With Thanksgiving being on a Thursday, many businesses will be closed or will be working with short staffs Friday. This doesn’t mean a long process, but it does mean a few extra days should be anticipated.

The Deals

When buying a home during the holidays, many people think they’ll get a steal on their new home, or a Black Friday-esque price tag on their new home. While there is less competition and prices often see a small lag during the winter months, the market is still the market. In a hot area with limited inventory, buyers shouldn’t expect firesale prices on their new home. With less competition out, though, they may have less stress from competing offers. It’s important to make a strong offer to ensure if you love a house, you’ll be able to get your offer accepted and turn it into your home.

Your Schedule

While the mortgage process is easy for most buyers (we’d argue, easiest when you work with MasonMac), it’s important to take into consideration that you will have to do some legwork – providing documents, returning disclosures, and actually going out to see homes during the holiday season will need to fit into your schedule. If you’ll be traveling or MIA for any period of time, it’s important to communicate that to your real estate agent and lender in advance so that your time away won’t shake up the process.

Know your Deadlines

If you want to be in your new home before Christmas, you should have found your new home by Thanksgiving. The purchase process generally takes anywhere from 3-4 weeks, so it’s important to keep that timeline in mind when planning to make a move. Everyone involved in the process will likely have some type of travel or time away from the office planned – that includes appraisers, title/escrow companies, and yes, even sellers – so keep this in mind as scheduling showings may even take a bit longer if you need a seller or seller’s agent to let you access a home.

The Big Picture

Overall, winter is a great time to buy or sell real estate, and buying a home during the holidays typically means less competition, more motivated buyers and sellers, and a process that doesn’t vary much from buying a home at any other time of year. Timing, expectations on people, and communication about time in or away from the office (or for buyers, time that will be spent out of time or unavailable) is important to maintaining timelines and ensuring all contractual dates are met. With this post coming at the end of October, there’s still plenty of time to find and settle on a new home in time for the holidays, and certainly time to find a new home before the new year.

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