The Albuquerque Journal today reports that U.S. home rental prices continue to rise. The report also contains the very telling statistic, via a Zillow economist, that while rental prices have risen 52% since 2000, incomes for renters have only increased by 25%.
Of course if there's one certainty in life, it's that rentals will always increase over time. A compelling argument for buying your own home and the huge short, medium and long term advantages of a fixed mortgage payment for the life of the home loan and, at the end of it all, your home is yours and yours alone with nothing more to pay.
No wonder, then, that home ownership is such a central pillar of The American Dream.
Of course not everyone is going to able to afford a home, for reasons of income level and/or a low credit score. The economic squeeze of recent years has of course taken a heavy toll on many people, but the really good news is that, for many would be home buyers, a much healthier economic outlook and buoyant current real estate market conditions could very possibly see you owning your own home at last.
Consider these two critical factors:
Low mortgage rates - A couple of days ago, it was announced that 30 year fixed mortgage rates had reached their lowest point since May 2013! What's even better is that pundits are now being cautiously optimistic that low rates will continue to be stable for at least the first two quarters of this year. Right now lenders are on average offering 3.63% on a 30-year fixed loan (source: National Mortgage News). This presents a simply amazing opportunity for anyone who can qualify for a home loan. You can lock in an ultra low rate for the entire period of the loan, which means your payments are very likely to decrease as a percentage of your income over time - compare that with the prospect of your monthly rental fee remaining constant for three decades - that's right it just isn't going to happen. Despite the optimistic predictions for continued low rates, remember that national and international political and economic conditions can have a direct, sudden and very significant effect on rates, so acting right now is our strongly recommended course of action.
Low down payment mortgages - Quite possibly THE best news in real estate in recent times. A Federal Reserve survey last year revealed that 45% of renters were delaying home purchase because of the struggle to save for a down payment. In response to this, and with the expressed aim of stimulating the first time buyer market, Fannie Mae, the leading source of liquidity for housing in America, has started to back mortgages with down payments of as little as 3% of the price of a home. Requirements for qualifying borrowers include the need to have a credit score of at least 620 and a willingness to receive home ownership counseling. The loans will only be applicable for single-family homes used as a primary residence. Obviously not every renter will be able to meet the strict criteria, but when you consider that many otherwise qualified buyers were being prevented from taking the plunge into home ownership simply because of the difficulties of funding a large down payment, it's easy to see that the dream of home ownership just took a giant leap forward.
Rising rental fees, looser lending standards, better affordability and the continuation, for now, of very low mortgage rates is creating a perfect storm of circumstances that is quickly gathering to make 2015 a major comeback year for the rookie home buyer. Why not seize the moment and contact us today for a full discussion of the possibilities in your individual situation.