The gap between the increase in personal income and residential real estate prices has been used to defend the concept that we are experiencing an affordability crisis in housing today.
It is true that home prices and wages are two key elements in any affordability equation. There is, however, an extremely important third component to that equation: mortgage interest rates.
Mortgage interest rates have fallen by more than a full percentage point from this time last year. Today’s rate is 3.75%; it was 4.86% at this time last year. This has dramatically increased a purchaser’s ability to afford a home.
Here are three reports validating that purchasing a home is in fact more affordable today than it was a year ago:
“Falling mortgage rates and slower home-price growth mean that many buyers this year are committing to lower mortgage payments than they would have faced for the same home last year. After rising at a double-digit annual pace in 2018, the principal-and-interest payment on the nation’s median-priced home – what we call the “typical mortgage payment”– fell year-over-year again.”
“At the national level, housing affordability is up from last month and up from a year ago…All four regions saw an increase in affordability from a year ago…Payment as a percentage of income was down from a year ago.”
“In 2019, the dynamic duo of lower mortgage rates and rising incomes overcame the negative impact of rising house price appreciation on affordability. Indeed, affordability reached its highest point since January 2018. Focusing on nominal house price changes alone as an indication of changing affordability, or even the relationship between nominal house price growth and income growth, overlooks what matters more to potential buyers – surging house-buying power driven by the dynamic duo of mortgage rates and income growth. And, we all know from experience, you buy what you can afford to pay per month.”
Though the price of homes may still be rising, the cost of purchasing a home is actually falling.
Tom Petty famously penned the words, “the waiting is the hardest part” in his early 80’s hit song The Waiting, and his thought process can surprisingly also be applied to individuals considering selling their homes today. Traditional thinking would suggest it may be best to wait until the spring to sell when there is a flood of buyers in the market, but right now may in fact be an even better time to list your home.
We can see the overall economy is good: wages are rising, there are near record-low unemployment rates, and mortgage interest rates are still very low too. Over the past 10+ years the housing market has stabilized, so what (if anything) is the biggest challenge in the housing market today?
“Total housing inventory at the end of September sat at 1.83 million, approximately equal to the amount of existing-homes available for sale in August, but a 2.7% decrease from 1.88 million one year ago. Unsold inventory is at a 4.1-month supply at the current sales pace, up from 4.0 months in August and down from the 4.4-month figure recorded in September 2018.”
What does this mean?
While homes are coming to the market, they aren’t coming fast enough! Right now, across the country there is less than 6 months of overall inventory of homes for sale, putting us in a seller’s market. The challenge is that there are not enough homes for sale to increase the supply needed for the number of people who want to buy, especially in the starter and middle-level markets.
To be in a balanced market (meaning we have enough inventory for the number of buyers in the market), we need to have 6 months of inventory available. Today we are nowhere near that number, and as a matter of fact, the last time we reached that height was August 2012 (as shown in the graph below):When we look at the inventory challenge today, we can see that now is a great time to sell your house. Truthfully, waiting may end up being the hardest part in the long run. This landscape is a great place for sellers who own homes in the starter and middle-level markets to take the opportunity to sell in a sellers’ market, before inventory catches up with demand. Serious buyers are actively in the market and ready to make a move at this time of year. When inventory is limited at the lower end, like it is today, selling before more homes are listed could mean a significant seller’s advantage to those who are ready to move up. The upper level of the market has much more inventory available to move into, so it’s a win across the board.
If you’re considering selling your home, don’t wait – now is the time to make your move! Take advantage of the high housing demand and the low inventory of homes for sale at the lower end of the market and use your purchasing power while mortgage rates are low to go after the move-up home of your dreams
A considerable number of potential buyers shy away from the real estate market because they’re uncertain about the buying process – particularly when it comes to qualifying for a mortgage.
For many, the mortgage process can be scary, but it doesn’t have to be!
In order to qualify in today’s market, you’ll need a down payment (the average down payment on all loans last year was 5%, with many buyers putting down 3% or less), a stable income, and a good credit history.
Once you’re ready to apply, here are 5 easy steps Freddie Macsuggests to follow:
Find out your current credit history and credit score– Even if you don’t have perfect credit, you may already qualify for a loan. The average FICO Score® for all closed loans in September was 737, according to Ellie Mae.
Start gathering all of your documentation– This includes income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
Contact a professional– Your real estate agent will be able to recommend a loan officer who can help you develop a spending plan, as well as help you determine how much home you can afford.
Consult with your lender– He or she will review your income, expenses, and financial goals in order to determine the type and amount of mortgage you qualify for.
Talk to your lender about pre-approval– A pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change) and demonstrates to home sellers that you’re serious about buying.
Many potential homebuyers believe they need a 20% down payment and a 780 FICO® score to qualify to buy a home. This stops many people from even trying to jump into homeownership! Here are some facts to help take the fear out of the process:
71% of buyers who purchased homes have put down less than 20%.
78.1% of loan applications were approved last month.
In September, the average credit score for approved loans was 737.
Much has been written about how residential real estate values have increased since the housing market started its recovery in 2012. However, little has been shared about what has taken place with residential rental prices. Let’s shed a little light on this subject.
In the most recent Apartment Rent Report, RentCafe explains how rents have continued to increase over the last twelve months because of a large demand and a limited supply.
“Continued interest in rental apartments and slowing construction keeps the national average rent on a strong upward trend.”
Zillow, in its latest Rent Index, agreed that rents are continuing on an “upward trend” across most of the country, and that the trend is accelerating:
“The median U.S. rent grew 2% year-over-year, to $1,595 per month. National rent growth is faster than a year ago, and while 46 of the 50 largest markets are showing deceleration in annual home value growth, annual rent growth is accelerating in 41 of the largest 50 markets.”
The Zillow report went on to detail rent increases since the beginning of the housing market recovery in 2012. Here is a graph showing the increases:
It is true that home prices have risen over the past seven years, increasing the cost of owning a home. However, the cost of renting a home has also increased over that same time period.
Bathrooms are hardly the focus point of a showing, but a gross and dirty bathroom is off-putting — enough so that a buyer might lose interest.
The first step to preparing your bathroom for staging is to deep clean. Scrub the tub and toilet, wipe down surfaces, sweep and mop, and take care of the mirror. Remember that any spot you miss will be an immediate eyesore and attention grabber — even if your bathroom isn’t the highlight of your home, it’s necessary for it to look spotless.
Update your shower curtain, towels, and bathmats.
At the very least, if you’re going to put out clean towels and bathmats, make sure they’re clean and look great. Updating to some cute decor is an inexpensive way to improve the look of your bathroom. While things don’t have to exactly match, make sure that your colors and patterns complement each other.
Shower curtain looking a bit dingy? Use this as an opportunity to upgrade. A beautiful, pristine bathroom with a shower curtain that has seen better days is guaranteed to lessen the look of the room.
Focus on lighting.
Before staging for photographs or hosting an open house, make sure all lightbulbs are working. But even if they are functioning, consider changing them out — good lighting is the key to a good photo.
Since most bathrooms don’t have access to natural light, brighter bulbs or warm-light bulbs can showcase this room better. If you’re taking pictures of the bathroom yourself, consider moving a lamp just outside the bathroom to get better lighting.
Highlight the best features.
It’s OK if your bathroom doesn’t have a gorgeous clawfoot tub or rain shower head. But if there is a standout feature of your bathroom, now’s the time to show it off! Shine a light (and in some cases, literally) on those amazing aspects of your bathroom.
Declutter the space.
An extra mirror or piece of artwork on the wall can enhance your bathroom’s look. Pictures of your family, makeup and shaving kits left out on the counter, and dirty laundry on the floor will do the exact opposite.
Make sure you clear off everything before taking photos. A good rule of thumb, think of how you would want the bathroom to look if your in-laws were coming over (though we guess maybe in some instances, that advice might backfire).
Make any necessary fixes.
A leaky faucet, a toilet that regularly clogs — these aren’t things you want to deal with or have showing when it comes to showings and home inspections. Even if these minor issues won’t show up in staging photos, it’s better to take care of them sooner rather than later.
As one homebuyer recently said, “I went to a showing on a house that was kind of gross, but okay. Then I went into the bathroom. The toilet was filled with black sludge. I was horrified.” Needless to say, she passed on the house.
Here's what you will need: 1 pound pasta (I used cavatappi.) 1 tablespoon olive oil (or bacon grease) 1 cup onion, chopped 1 clove garlic, minced 3 tablespoons butter 2 tablespoons all-purpose flour 2 cups whole milk 1/2 teaspoon onion powder 1/2 teaspoon salt 1/2 teaspoon black pepper pinch of nutmeg 1 cup pumpkin puree 3 cups freshly shredded cheese (I used a combination of sharp cheddar cheese and Dubliner.) 8 strips thick cut bacon, cooked 1/4 cup panko bread crumbs
Begin by cooking your pasta according to the package directions. I like mine al dente. Strain the water from the cooked pasta and set the pasta aside.
Preheat your oven to 350 degrees F.
In a medium or large oven-safe Dutch oven, add a thin layer of olive oil (or bacon grease). Then add your onions and sauté they until they start to golden. Ttoss in your garlic and cook for another minute.
Next, melt your butter with the onion and garlic. When melted, slowly whisk in the flour. Continue cooking and whisking for a minute.
Slowly mix the milk into the mixture until smooth. Continue to cook the mixture while stirring frequently until it bubbles and thickens. At this point, reduce the heat to low.
Stir in the onion powder, salt, pepper, nutmeg, and pumpkin puree until smooth. Then add your shredded cheese. (I like to reserve a handful of cheese to top off the dish.) Whisk the cheese cause until melted and smooth.
Remove from heat, add your cooked pasta, and stir. Then, add your bacon and stir.
Sprinkle the panko crumbs over top. Then top with the reserved (or extra) cheese.
Cover with a lid and bake for about 20 minutes until the cheese is melted and bubbling.
| prep time: 15mins| cook time: 50mins| total time: 1hr5mins
1teaspoonpumpkin pie spice
1 15-ouncecan pumpkin
1/2cuppacked brown sugar
3 to 4cupspowdered sugaradd until desired consistency / firmness
extra ground cinnamon sprinkled on topoptional
Preheat oven to 350 degrees F.
In the bowl of a stand mixer beat butter on medium speed for 30 seconds. Add granulated sugar, baking powder, baking soda, salt, cinnamon, pumpkin pie spice, cloves and nutmeg. Beat until combined.
Beat in the eggs and vanilla until combined. Then, add the pumpkin. Beat in as much of the flour as you can using the mixer. Stir in remaining flour with a wooden spoon.
Drop dough by heaping teaspoons 2 inches apart on ungreased cookie sheets. Bake for 10 to 12 minutes or until tops are set. Transfer to wire racks to cool.
For frosting, in a small saucepan heat butter and brown sugar until melted and smooth. Transfer to a medium bowl. Stir in milk and vanilla. Beat in powdered sugar until smooth. (I made a double batch of the frosting and ended up using all of it. I recommend doing the same.)
Spread frosting on the cooled cookies. Sprinkle with additional cinnamon, if desired.