Looking at affordability and why waiting will cost home buyers more money, slowing home price growth, the burden of student loans and home buying, construction unemployment and more…
Affordability Decreases to Lowest Level in 10 Years
U.S. home prices in the third quarter were at the least affordable level since Q3 2008 — a 10-year low. Among 440 U.S. counties analyzed in the report, 344 (78 percent) were less affordable than the long-term affordability averages for the county — the highest percentage of counties below historic affordability averages since Q3 2008.
This sounds really scary BUT you must look at what is happening in your area and decide what is affordable for you. For example, Attom says you only need an annual income of $41,032 to buy in Anderson County SC.
That of course is assuming many different things such as putting 3% down and a 28% front-end DTI. If you are serious about buying a home, take the first step and talk to a mortgage lender ASAP.
Waiting to buy a home could prove to be costly if you decide to wait a year:
Home prices and mortgage rates are both projected to continue rising. If they do, the amounts above will only grow even more and make buying a home more costly.
Which could mean you are priced out of the market OR you must settle for a home that is not as nice as you want or in a location that is not perfect.
Home Price Growth Hits the Brakes
National home prices increased 5.5 percent year over year in August 2018 and are forecast to increase 4.7 percent from August 2018 to August 2019. The August HPI gain was the slowest year-over-year gain since October 2016. An analysis of the market by price tiers indicates that lower-priced homes experienced significantly higher gains.
The lowest price tier increased 8.2 percent year over year, compared with 6.8 percent for the low- to middle-price tier, 5.8 percent for the middle- to moderate-price tier, and 4.4 percent for the high-price tier. Appreciation in the low-price tier began pulling ahead of the other price tiers in 2013, and appreciation in the low-price tier has been steady since then. The five-year appreciation rate (from August 2013 to August 2018) for the low-price tier was 47 percent, compared with five-year appreciation of 37 percent for the low- to middle-price tier, 31 percent for the middle- to moderate-price tier, and 24 percent for the high-price tier.
The strong demand for lower priced homes combined with the lack of lower priced homes for sale has caused the rapid increase in prices in the lowest price tier. CoreLogic is looking at national data but we can see some similarities in our area.
There is a key difference in that the lowest priced homes are not increasing as much as the middle in Anderson County. Much of this has to do with the reality of what the homes in the lowest price tier in our area really are.
Plus the homes in the lowest price tier in our area often will not qualify for most traditional mortgages. We often see homes in the lowest price tier in the Anderson are sell for cash since getting a mortgage for super cheap properties can be a problem for most buyers.
Student Loan Burden Prevents Home Buying
Aspirations of homeownership remain strong, with 92 percent of adults saying homeownership is an important part of the American dream. However, a steady and significant percentage of consumers with student loans worry their debt will affect their ability to achieve homeownership in the future.
In 2018, 36 percent of adults knew someone who delayed the purchase of a home because of student loan debt. Among millennials (adults ages 18-34), 59 percent knew someone who delayed buying a home because of student loan debt.
Nevertheless, homeownership remains a goal for most people and is recognized as a key source of financial stability. The survey found 80 percent of all adults and 68 percent of millennials believe owning a home increases financial stability.
The burden of student loans can seem to make home ownership unattainable but becoming an educated and informed consumer can overcome any obstacle. Higher education is a worthwhile endeavor just like becoming a home owner.
Home ownership and a college degree require hard work and sacrifice. But the rewards from both can dramatically improve your life.
There are always ways to achieve your goals, whether it is buying a home or getting a degree. Do not think that buying a home is impossible because of the burden of student loans.
Investigate your options and educate yourself on the various low down payment mortgage options while improving your credit. You may be pleasantly surprised!
Construction Unemployment Rates Decrease
Estimated August construction unemployment rates fell nationally and in every state except Colorado on a year-over-year basis, according to an analysis of U.S. Bureau of Labor Statistics data released today by ABC.
Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC, said:
Continued healthy construction activity across the nation is keeping pressure on the construction labor market, resulting in lower unemployment rates than a year ago. State construction unemployment rates fell on a year-over-year basis in every state but Colorado, whose rate of 2.7 percent was unchanged from a year ago. This was also the second month in a row the national construction NSA unemployment rate fell below the overall national NSA unemployment rate, which has only occurred five times since the national construction unemployment rate data was first recorded in 2000.
This is a pretty good sign that the economy is booming. However, we are still NOT seeing enough affordable homes being built in many areas of the US.
We are lucky that there are plenty of new affordable homes being built in the Anderson area. Of course, how you define affordable may be very different from others.
More Good News for the Economy
Economic activity in the non-manufacturing sector grew in September for the 104th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.
You may have missed yesterday’s news that included the latest positive report from ISM on manufacturing. The economy is really humming along nicely…
Well that is all for today! As always, if you have any questions about real estate in Anderson County SC, please Contact Me!