THREE REASONS HOME BUYERS ARE ACTIVELY SEEKING TO BUY

Buyers are out shaking the bushes looking for fantastic deals for new and existing homes.  What are the three top motivating factors driving renewed interest with buyers?

1. LOW MORTGAGE RATES:  It should come as no surprise that low mortgage rates is number one on our list of top three reason for increased buyer interest.  Lower interest rates make it more affordable for first-time buyers to enter the housing market.  A recent Lending Tree survey revealed that 67% of respondents wanted to take advantage of the lower rates.

2. REDUCED SPENDING:  Here is one that might have escaped your attention, but with the stay in place order due to the corona virus, families have noticed a decrease in expenses related to traveling to and from work and other social events creating additional funds for a down payment.

3. RE-EVALUATING SPACE:  The stay-in-place order has given buyers an opportunity to evaluate the available space in their current residence.  Many have discovered that "home sweet home" is just not adequate for their needs and many have developed a real taste for working at home.  The need for extra features in a home - more living space, a home office, etc. is top on buyers wish lists.

The number of available homes currently on the market may not be sufficient to meet the increased need of this new group of buyers.  Sellers may have to consider a different pricing strategy as a fresh stream of buyers enter the market.  

Much to take into consideration as the 2020 summer/spring housing market heats up. 

RENTER'S DILEMMA: HOUSE OR APARTMENT

Deciding whether to rent an apartment or a house depends on what you are looking for in a home. Both have their pros and cons.  Weighing the differences can create the "renter's dilemma." 

Let's consider three questions to help in the decision making process (in no particular order of importance).

1. How much living space do you need?

  Renting a house will, with few exceptions, provide greater living space than renting an apartment.  Not only are there more rooms, but the functionality of the rooms is enhanced by more space than corresponding rooms in an apartment.

  If you are sharing a home with a roommate, the house will afford you more living space.  If you are going to rent alone you may find the extra space in a house may not be worth what you are paying for it.

2. How much monthly rental can you afford?

 A lot depends on the current housing market in your area.  But when all things are equal in the same area, you will most likely find renting an apartment is more affordable, particularly if you are renting on your own.

 If the housing market is flooded with an excess of houses to sell, you may find home owners deciding to rent their houses instead of selling.  This will be an advantage for you when discussing rental price.

 The general rule: If you are looking at a place near a large metropolitan area or where the housing market is stable - renting an apartment will cost less than to rent a house.  If a surplus of houses are on the market or you're looking towards a more rural area, you can find affordable deals on house rentals as well.

3. What are you looking for in the way of amenities?

 More often than not you will find that rental houses offer more amenities than apartments.  If amenities like a washing machine, dryers, and dishwasher are important to you, than you will more than likely find them in a house rather than an apartment.  

 On the other hand, if onsite management that responds to maintenance or emergencies quickly is what you are looking for than apartments will be your choice.  Apartments are more likely to offer pools, community spaces, fitness centers, and property maintenance as added benefits.

In the end, how you answer these three questions will determine which property will best suit your needs, your finances and your level of comfort.







    

IT'S ECONOMICS 101 - THE LAW OF SUPPLY AND DEMAND

The economics behind buying and selling a home today is fundamental.  Its roots are deep in the Law of Supply and Demand. Today's housing market reflects that principle as there are more buyers than sellers creating higher prices for houses. 

Sellers are seeking top dollar for their houses, while buyers are searching for the best buy at a modest and affordable price. 

If you can believe it, there has been an upside to the COVID-19 pandemic - people have found ways to work from their homes.  As a result, many people are shifting their search pattern towards the suburbs where home prices as more conducive to buyers.  Why pay for the privilege of living in expensive metropolitan areas when there are larger and more affordable homes in the outlying areas?

Another significant reason for higher home prices is the inability of new home builders to meet the demand for modestly priced starter homes.  Since the housing crisis of the early 2000's home starts have taken been slow and have left a void in the housing market.  The recent surge in new housing projects is an attempt to play "catch up".

With the housing market pendulum swung to support a seller's market, the return of the American economy and higher employment will create the force necessary to bring the pendulum back towards a more a balanced housing market.  At which time, prices will begin drop with more homes emerging on the market bringing new buyers into the marketplace.

WHEN TO BUY YOUR FIRST HOME

Buying your first home is always a huge decision.  The decision to buy needs to be sooner rather than later.  The earlier you get into the game, the better you will be positioned to make the move up to a larger home.

1. Start with a home that fits your finances.  Do the math!  Multiple your yearly income by 4 and you will arrive at a figure that will most closely approximate how much house you can afford.  Example: Yearly income: $30,000 x 4 = $120,000 home.  Don't push the limits of your income; be conservative and leave a buffer for unforeseen emergencies that may happen.

2. A "starter home" is just that - a place to start.  Getting your feet wet as a home buyer is important.  Educating yourself along the way enables you to move through the home buying process with less apprehension.  A "starter home" is just that a jumping off place for you to enter the housing market while learning the "ins and outs" of home ownership.  

3. Create a plan for "moving on up".  Your plan to "move up" needs some forethought, not a knee jerk reaction.  It will be not so much what I can afford, but rather what do I need.  Just because you win the lottery does not mean you buy a mansion.  Let your housing needs guide you in your decision to move up to a larger house and then "do the math"!

4. Don't be afraid to "downsize".  As your housing needs change and your family dynamics change you may find you have more house than you need.  Downsizing is not a curse word!  That big house may no longer be necessary for a number of reasons.  Downsizing makes room for others to move up while you relocate to a more practical home setting.

Buying your first home is like your first kiss - something you look forward to and something you never forget.  Buying your first house creates a pattern for your future housing decision.