Why You Should Consider Condos as Part of Your Home Search
The historically low inventory over the past few years led to challenges for many buyers trying to find a home that met their needs and their budget. If you’re in the same boat, you should know the recent shift in the housing market may have opened up doors for you to restart your search.The inventory of homes for sale has increased this year, and that’s giving buyers much needed options. As Danielle Hale, Chief Economist at realtor.com, says:“. . . today’s shoppers have more than 5 homes to consider for every 4 they had at this time a year ago.”But perspective is important. Overall, housing supply is still low. If you need even more choices, expanding your search by adding additional housing types, like condominiums, could help.Exploring Condos Could Add Options That Fit Your BudgetOne thing to consider is condos generally differ from single-family homes in average space and floorplans. But that size difference is one reason why condos can be a more affordable option. According to a recent report from realtor.com, condo buyers paid roughly 7% less for their home than buyers of other housing types last year. With rising mortgage rates and home prices, the relative affordability of a condo could be worth considering.Remember, your first home doesn’t have to be your forever home. The important thing is to get your foot in the door as a homeowner. Buying a condo now can springboard you into a bigger home later on. An article from the Urban Institute explains:“Because condos and co-ops are generally more affordable, they tend to help first-time homebuyers step onto the first rung of the homeownership ladder. These buyers often use the equity on their condo to then purchase a larger single-family home.”In other words, owning a condo will help you start building wealth in the form of home equity. In time, the equity you build can fuel a future purchase should you decide you want to buy a home with more space or different amenities.Condo Living Provides Several Great PerksBoosting the number of options in your budget during your home search is just one reason to consider condos, but there are several other benefits to condo living.First, they tend to require minimal upkeep and lower maintenance – and that can give you more time to spend doing the things you enjoy. A recent article from Bankrate highlights this, saying:“Condos can be a good option for anyone who wants to keep home maintenance to a minimum . . . if the roof is leaking or the carpet in the lobby needs to be replaced, that’s not your responsibility — the condo association handles those duties.”Plus, since many condos are located in or near city centers, they offer the added benefit of being in close proximity to work and leisure. Again, realtor.com explains:“Buying a condo, which is generally less expensive than a single-family home, enables a household to afford to own in the middle of it all, and often means a newer-built home with less maintenance responsibility.”Ultimately, owning and living in a condo can be a lifestyle choice. And if that appeals to you, they could give you the added options you need to buy your first home.Bottom LineAdding condominiums to your housing search could be a great move. If you’re ready to search condos in our area, let’s connect today.
How an Expert Can Help You Understand Inflation & Mortgage Rates
If you’re following today’s housing market, you know two of the top issues consumers face are inflation and mortgage rates. Let’s take a look at each one.Inflation and the Housing MarketThis year, inflation reached a high not seen in forty years. For the average consumer, you probably felt the pinch at the gas pump and in the grocery store. It may have even impacted your ability to save money to buy a home.While the Federal Reserve is working hard to lower inflation, the August data shows the inflation rate was still higher than expected. This news impacted the stock market and fueled conversations about a recession. It also played a role in the Federal Reserve’s decision to raise the Federal Funds Rate last week. As Bankrate says:“. . . the Fed has raised rates again, announcing yet another three-quarter-point hike on September 21 . . . The hikes are designed to cool an economy that has been on fire. . .”While their actions don’t directly dictate what happens with mortgage rates, their decisions have contributed to the intentional cooldown in the housing market. A recent article from Fortune explains:“As the Federal Reserve moved into inflation-fighting mode, financial markets quickly put upward pressure on mortgage rates. Those elevated mortgage rates . . . coupled with sky-high home prices, threw cold water onto the housing boom.”The Impact on Rising Mortgage RatesOver the past few months, mortgage rates have fluctuated in light of growing economic pressures. Most recently, the average 30-year fixed mortgage rate according to Freddie Mac ticked above 6% for the first time in well over a decade (see graph below):The mortgage rate increases this year are the big reason buyer demand has pulled back in recent months. Basically, as rates (and home prices) rose, so did the cost of buying a home. That pushed on affordability and priced some buyers out of the market, so home sales slowed and the inventory of homes for sale grew as a result.Where Experts Say Rates and Inflation Will Go from HereMoving forward, both of these factors will continue to impact the housing market. A recent article from CNET puts the relationship between inflation and mortgage rates in simple terms:“As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.”Sam Khater, Chief Economist at Freddie Mac, has this to say about where rates may go from here:“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth. The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, . . .” While there’s no way to say with certainty where mortgage rates will go from here, there is something you can do to stay informed, and that’s connect with a trusted real estate advisor. They keep their pulse on what’s happening today and help you understand what the experts are projecting. They can provide you with the best advice possible.Bottom LineRising inflation and higher mortgage rates have had a clear impact on housing. For expert insights on the latest trends in the housing market and what they mean for you, let’s connect.
The True Strength of Homeowners Today
The real estate market is on just about everyone’s mind these days. That’s because the unsustainable market of the past two years is behind us, and the difference is being felt. The question now is, just how financially strong are homeowners throughout the country? Mortgage debt grew beyond 10 trillion dollars over the past year, and many called that a troubling sign when it happened for the first time in history.Recently Odeta Kushi, Deputy Chief Economist at First American, answered that question when she said:“U.S. households own $41 trillion in owner-occupied real estate, just over $12 trillion in debt, and the remaining ~$29 trillion in equity. The national “LTV” in Q2 2022 was 29.5%, the lowest since 1983.”She continued on to say:“Homeowners had an average of $320,000 in inflation-adjusted equity in their homes in Q2 2022, an all-time high.”What Is LTV? The term LTV refers to loan to value ratio. For more context, here’s how the Mortgage Reports defines it:“Your ‘loan to value ratio’ (LTV) compares the size of your mortgage loan to the value of the home. For example: If your home is worth $200,000, and you have a mortgage for $180,000, your LTV ratio is 90% — because the loan makes up 90% of the total price.You can also think about LTV in terms of your down payment. If you put 20% down, that means you’re borrowing 80% of the home’s value. So your LTV ratio is 80%.”Why Is This Important?This is yet another reason we won’t see the housing market crash. Home equity allows homeowners to be in control. For example, if someone did need to sell their home, they likely have the equity they need to be able to sell it and still put money in their pocket. This was not the case back in 2008, when many owed more on their homes than they were worth.Bottom Line Homeowners today have more financial strength than they have had since 1983. This is a combination of how homeowners have handled equity since the crash and rising home prices of the last two years. And this is yet another reason homeownership in any market makes sense.
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