As we kick off the new year, many families have made resolutions to enter the housing market in 2019. Whether you are thinking of finally ditching your landlord and buying your first home or selling your starter house to move into your forever home, there are two pieces of the real estate puzzle you need to watch carefully: interest rates & inventory.

Interest Rates

Mortgage interest rates had been on the rise for much of 2018, but they made a welcome reversal at the end of the year. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates climbed to 4.94% in November before falling to 4.62% for a 30-year fixed rate mortgage last week. Despite the recent drop, interest rates are projected to reach 5% in 2019.

The

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As agents, it seems like we're always trying to impress on home buyers the importance of getting at least pre-approved before looking at houses.  But some buyers just don't want to make the effort until they "find the one". 

Now those buyers are two steps behind.  Just getting pre-approved is no longer enough.  Today's savviest agents get their buyers loan approved in advance. 

Pre-Qualification, Pre-Approval & Loan Approved. What's the difference?

Pre-Qualification

Getting pre-qualified for a loan is an easy process. Probably too easy.  It’s just an initial evaluation of your creditworthiness.  You give the lender your approximate income, the amount of your debt and any other important details from your credit history, often over the

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Highlights:

• Hiring a real estate professional to guide you through the process of buying a home or selling your house can be one of the best decisions you make!
• They are there for you to help with contracts, explaining the process, negotiations, and pricing (both when making an offer or setting the right price for your home).
• One of the top reasons to hire a real estate professional is their understanding of your local market and how the conditions in your neighborhood will impact your experience.

 

Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. Their latest survey data covers responses from 2013-2016.

The study revealed that the median net worth of a homeowner was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).

These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.

There are many who see that statistic and point toward how broad the range of respondents are for the Federal Reserve survey. Their study includes all economic and social groups and also includes all age groups. The argument is

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Headlines spotlight the fact that buying a home is less affordable today than it was at any other time in more than a decade. Those headlines are accurate.

 

Understandably, buying a home is more expensive now than immediately following one of the worst housing crashes in American history. Over the past decade, the market was flooded with distressed properties (foreclosures and short sales) selling at 10-50% discounts. There were so many that this lowered the prices of non-distressed homes in the same neighborhoods. As a result, mortgage rates were kept low to help the economy.

Prices have since recovered. Mortgage rates have increased as the economy has gained strength. This has impacted housing affordability. However, it’s necessary

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The largest obstacle renters face when planning to buy a home is saving for a down payment. This challenge is amplified by rising rents, which has eaten into the amount of money renters have leftover for savings each month after paying expenses.

In combination with higher rents, survey after survey has shown that non-homeowners (renters and those living rent-free with family or friends) believe they need to save upwards of 20% for their down payment!

According to the “Barriers to Accessing Homeownership” study commissioned in partnership between the Urban Institute, Down Payment Resource, and Freddie Mac, 39% of non-homeowners and 30% of those who already own a home believe they need more than a 20% down payment.

The percentage of those

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There are some people who haven’t purchased homes because they are uncomfortable taking on the obligation of a mortgage. However, everyone should realize that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.

As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:

“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”

With home prices rising, many renters are concerned about

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Recently, David Greene, co-host of the BiggerPockets podcast and a nationally renowned author and speaker, wrote an article in Forbes explaining how investing in real estate could help build wealth. Many of the points he made also apply to a family owning their own home. Here are a few:

1. Appreciation

“The rising of home prices over time, is how the majority of wealth is built in real estate. This is the ‘home run’ you hear of when people make a large windfall of money. While prices fluctuate, over the long run real estate values have always gone up, always, and there is no reason to think that is going to change.

One thing to consider when it comes to real estate appreciation affecting your ROI is the fact that appreciation

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Over the course of the last thirty years, a shift has happened. An entire generation has been raised to believe that a college education is their key to unlocking opportunities that were not available to their parent’s or grandparent’s generations.

Due to this, student loan debt has soared to $1.5 trillion and represents the largest category of debt, surpassing credit card and auto loan debt in 2010 and never looking back. As more and more Americans continue their education amongst rising tuition costs, this number will no doubt increase.

Many housing experts have blamed student loans for a drop in the homeownership rate for young families, and to an extent, they’ve been right. Increased debt at the time of graduation has no doubt

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It's Not Always All About the Money

You've been watching the online listings of homes for sale.  You want just the right school district, and a reasonable distance for your commute.   You've driven by a few homes, attended open houses, and toured several after work and on weekends too.  Finally you find that perfect house to call a ‘home.’   The price is right, but you know in a competitive market you'll need to make a great offer to guarantee that your dream of making this house yours comes true!

Here are 4 steps to consider when making an offer in today's market:

1. Don't Get Pre-approved.  Get Loan Approved

As agents, it seems like we're always trying to impress on home buyers the importance of getting pre-approved before looking at

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