Home Buyers

Housing Affordability is the Lowest Since 2008

It has become challenging for first-time buyers as they are getting caught between rising rents and the cost of purchasing a home. As home prices continue to rise, buyers are faced with either increasing their budget for purchasing or potentially lowering their standards for the home they purchase.

According to the National Association of Realtors, first-time buyers represented 27% of existing-home sales in January. With mortgage rates above 4% and the highest they have been in three years, buyers with limited funds and budgets for housing are being priced out of the market.

The pandemic created a buying frenzy as the combination of record-low mortgage rates with people’s need for more living space to work remotely. At the same time, housing inventory plunged, and new construction was severely constrained due to supply chain disruptions. Read More

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Why Some Owners Are Staying Put

New affordability estimates reveal why there are so few houses for sale: owners who wish to sell may not afford to buy another home even if they could locate one.

As per the National Association of Home Builders, approximately seven out of ten households in today’s market cannot afford a median-priced home. Under typical underwriting criteria, the earnings of 87.5 million families are insufficient to qualify for loans. Worse, for every $1,000 above the average rent, 118,000 more households are priced out, one of the main reasons so many people remain put. Of course, it’s more complicated than simply selling one home and purchasing another. For starters, there’s the expense of selling, which can chip into the earnings you’d intended to put toward your future home. The process of purchasing a home is also not inexpensive. Then there’s the enormous expense of relocation. And if you’re caught between two transactions — selling your old house and buying a new one — you can find yourself with two mortgage payments for a while. Read More

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January Builder Applications Up from December; Down from Year Ago

According to the Mortgage Bankers Association (MBA) Builder Application Survey, mortgage applications for new home purchases rose 10% in January from December but down 12.5 percent from last year earlier.

Conventional loans accounted for 77.0 percent of loan applications, while FHA loans accounted for 13.0 percent, RHS/USDA loans represented 0.5 percent, and VA loans counted for 9.5 percent. In January, the average loan size for new homes grew from $423,102 to $426,954.

Based on data from the BAS, the MBA estimated new single-family home sales at a seasonally adjusted annual rate of 821,000 units in January, the worst annual pace since last July and a 7.4 percent fall from December with 887,000 units. Read More

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