We’re here to educate you on what is happening in 2019 in this market.
We are halfway through the year and it’s time for a little recap of what?s going on.
Depending on the market that you’re in, you’ve probably seen your home prices either stabilize, decline a little bit or go up. That is literally what it’s doing depending on the community.
We see really high-priced homes stabilizing and even in a smidge of a decline. But we want to make sure you understand that the level of appreciation has declined it’s not depreciation.
If you purchased at the right time, you already have equity in your home so it’s just about the level of appreciation increasing and the steady rate at which is doing it or it has stabilized.
Some people are concerned about the market tanking or going down again, but most properties at this point have seen some appreciation If they have purchased in the last 5 to 10 years. We are definitely seeing they have equity in their homes.
This is not a recession. We are on a 12 year high. The market has to stabilize in order for buyers to purchase.
So now let’s talk about first time homebuyers.
First time homebuyers are actually not completely back in the market. It’s very scary for them because most can’t afford what?s out there available right now. So far in 2019, first time homebuyers only account for 31% of the sales. That is statistically lower than the 40% that is traditional for first time homebuyers.
What is the reason that first time homebuyers can’t purchase?
There are actually four main reasons:
- 1. Student debt. Student debt has tripled in the last decade. This makes it really difficult for the debt to income ratio for the first time homebuyers to actually get into a property because they owe so much. Now there are ways for lenders to be able to get around it, but it is definitely causing issues for first time homebuyers.
- 2. Starter homes are in short supply. Most builders and developers that are building right now are looking towards higher end homes. Most of the homes start out in the high $400ks, $500ks, $600ks and even in the millions. First time homebuyers simply cannot afford that. Traditionally they are in the low $200,000s, so there’s just not a big supply available for them at this point.
- 3. Affordable condos and townhomes normally available to first time homebuyers are not FHA approved for the most part. Unfortunately, first time homebuyers typically go to FHA route. Which leads us to point #4.
- 4. If the credit scores are too low buyers can’t really get conventional financing so they opt for the FHA. FHA has more limitations than conventional financing. So we see that this is also a struggle. Now the credit score regulations have actually increased so it makes it a little more difficult for first time homebuyers to purchase a home.
We have to make sure that as first time homebuyers you have enough saved for a down payment and for closing cost. There are also miscellaneous fees that people don’t consider like moving fees, rehabbing a home (if that is something you want to do), getting it “move-in ready”, whatever that means to prospective buyers.
Interestingly enough, 1/3 of all recent homebuyers actually had down payment assistance, but from family members. So if you have family that is willing to help you out with that down payment, that can be a really great opportunity to get you into your first home if that is something you’re looking to do.
We are seeing that the market has stabilized. We also see in certain areas it has gone into a decline. You have to understand that as a home owner, you may have a lot of equity in your property, but it may not go up as fast. As an entire market we don’t want to see an increase at a rapid rate considering we are at a 12-year market high.
If you have any questions about the market, please feel free to contact us at 407-801-9914.
