Fannie Mae Home Price Index Shows Growth Slow Down in Q3 Millennials are Likely to Buy Property in the next Two Years Due to an Improvement in Their Financial Situation

Home Price Growth

Home Price Growth Slowed Down in Q3

The Fannie Mae Home Price Index (FNM-HPI) measures the average quarterly price change for all single-family homes in the United States, excluding condos. It is a national index based on repeat transactions. According to the FNM-HPI, which was announced on Monday, home price growth decreased from 19.1% in Q2 2022 to 13.2% in Q3 2022 as mortgage rates increased and housing inventories rose. 

Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a statement that the third-quarter slowdown in year-over-year home price growth resulted from rising mortgage rates and decreasing housing affordability. “Furthermore, the supply of completed, new single-family homes for sale has begun to rise, suggesting that homebuilders may also need to begin offering greater price concessions to move inventory. We expect these trends to continue in the coming months,” Duncan said.

Millennials versus Homeownership

The fastest-growing demographic in terms of homebuyers, millennials make up about one-fifth of the American population. They account for 43% of all new home purchases. However, compared to older generations, fewer millennials are purchasing homes. 

According to a Fannie Mae survey from 2019, more than half of millennials and Gen Zers (55%) believe housing is out of their price range. In addition, when compared to earlier generations, millennials are less likely to purchase homes for the following reasons:

Low mortgage rates, housing shortages, inflation, and growing building material costs put high housing costs at the top of the list. The National Association of REALTORS reports that the typical price of an existing home has increased to over $350,000—an all-time high.

Next is the substantial debt load that many millennials have. Sadly, more than 75 percent of millennials are also dealing with debt, which makes it extremely difficult to have enough money for a down payment on a house.

Finally, stricter loan requirements deter millennials from buying a home. According to a report from the Mortgage Bankers Association, mortgage credit availability decreased in June 2021. The Mortgage Credit Availability Index dropping by 8.5% in June of last year is another sign that lending criteria are tightening.

Millennials stated they are likely to buy a property in the next two years due to an improvement in their financial situation, which is consistent with healthy household balance sheets and rising incomes in the United States, according to the 2022 Millennial Home Improvement Survey.

Next week’s potential market-moving reports are:

  • Monday, October 24th – Chicago Fed National Activity Index, S&P U.S. Services PMI
  • Tuesday, October 25th – S&P Case-Shiller U.S. Home Price Index, FHFA U.S. Home Price Index
  • Wednesday, October 26th – New Home Sales (SAAR)
  • Thursday, October 27th – Initial Jobless Claims, Continuing Jobless Claims
  • Friday, October 28th – Employment Cost Index (SAAR), Pending Home Sales Index

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at 310-905-5587.

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Discover The Meaning of Real Estate Secret Words For Instance: Fannie Mae, Freddie, Conforming Loans And So On Today

If you’re looking for a new home to buy or investigating home mortgage loan choices, you’ve probably run into some friendly, upbeat people who want to help you achieve your home ownership dreams or maximize the value of your home buying potential. However, some of these people sure talk funny! The real estate industry does have its own lingo. Just like any industry, sometimes the pros forget that everyone doesn’t know every single specialized term or abbreviation. So, we thought we’d put together a short list of some common terms you’ll hear, and what they stand for.

  • Conforming Loan: A conforming loan is a mortgage that fits Fannie Mae and Freddie Mac (see below) guidelines for the size of loan and loan underwriting criteria. In November 2019, the FHFA (Federal Housing Finance Agency) announced that the maximum 2020 conforming loan limit for a single-family house would be $510,400.
  • Conventional loan: A conventional loan is a home mortgage that isn’t provided through or guaranteed by a government organization. So, a mortgage that is offered by a private lender or a bank/credit union that isn’t a VA, USDA, FHA, or other government sponsored loan is a “conventional” mortgage.
  • Escrow: Escrow is an unusual word, but it just stands for the third party and time period where the money and contracts in a real estate transaction are verified and the property title is transferred.
  • Fannie Mae and Freddie Mac: These two people aren’t a married couple. They’re two different home mortgage associations that are chartered by the Federal government. Freddie Mac stands for the Federal Home Loan Mortgage Corporation. Fannie Mae stands for the Federal National Mortgage Association.
  • FHA: FHA stands for the Federal Housing Association, which was established as part of “New Deal” programs in the 1930s, and is part of the U.S. Department of Housing and Urban Development.

There are a lot of other specialized terms in the real estate and home mortgage industry. One of the advantages of working with an RE and mortgage professional is their ability to explain these terms to you, so you can understand what your choices are in homes to buy and loans that you can qualify for.

Sources

https://www.housingwire.com/articles/hey-housing-professionals-your-jargon-isnt-helping-consumers/
https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Maximum-Conforming-Loan-Limits-for-2020.aspx

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Hurry Now! Start Restoring Your House That Has Seen Better Days Through FHA. You Can Also Opt For Loan Products By Freddie Mac Or Fannie Mae

Did you know there are California home loans that will help you not just to buy a home, but also pay for renovations? If you’re considering buying a house that needs some work, sometimes called a “fixer-upper,” or a “handy-mans special”, or a property that needs “TLC” aka “Tender Loving Care”, you do have options to pay for the work that it will need.

What type of home renovation loans are there?

The best-known type of home renovation loan is the FHA 203(k) loan. This loan comes in two versions: limited and standard. The limited FHA 203(k) loan will pay for up to $35,000 in renovations, as long as they’re not considered to be luxuries by the Federal Housing Administration (FHA). A new bathroom isn’t a luxury, but a new swimming pool would be, according to FHA guidelines.

The standard FHA 203(k) loan will pay for renovations over $35,000. In order to qualify for this loan, you will need to work with a HUD-certified consultant who will get bids and oversee inspections of the work. Both of the FHA 203(k) loans will pay for renovations on your primary residence. They aren’t available for second homes or investment properties.

Other home renovation loans include FannieMae’s HomeStyle loan, and Freddie Mac’s CHOICE Renovation loan. These loans require higher credit scores than an FHA 203(k) loan. You could potentially qualify for an FHA 203(k) loan with a credit score as low as 500 to 520, but you will need to make a down payment of at least 10%.

Don’t let a “fixer-upper” stop you from buying the home you want

If you find a home that you can afford in the neighborhood you want, but it needs upgrading or repairs, don’t pass it by until you’ve considered a home renovation loan like an FHA 203(k) loan. There are many California home mortgages which can pay for the purchase and renovations that can help you to move into the neighborhood you want to live in, and have a modernized live-able and enjoyable home with the upgrades/renovations and repairs, you want and need. These loans allow you to finance 100% of the renovation rehab costs.  All those costs are rolled into the loan.  You just pay your normal down payment on the purchase, the rest of the costs including renovation, permits, and holding costs during the renovation period are often times covered by the loan. So you start making payments when your home is move in ready. Contact Us here at California Platinum Loans to see how we can make your dreams of buying a fixer upper with a low down payment a reality today!

Sources

https://www.moneycrashers.com/fha-203k-mortgage-loan-requirements/

https://www.nerdwallet.com/blog/mortgages/renovation-loans-expand-homebuying-options/

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