Affordability ~ Buy rather than Rent

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Rapidly rising rents are ensuring that it makes more sense to buy in much of the country, a new report from RealtyTrac showed. According to RealtyTrac’s 2016 Rental Affordability Analysis Report, it is currently more affordable to buy rather than rent in 58% of the 504 counties analyzed as part of the report, despite home price appreciation outpacing rent growth in 55% of markets. Not only is the rent rising equal to, or in some cases more than home prices, rents are outpacing weekly wage growth in 57% of markets, RealtyTrac’s report showed. According to RealtyTrac’s report, rents on three-bedroom properties are expected to increase an average of 3.5% in 2016 over 2015 across all 504 counties analyzed, per the HUD data. “Renters in 2016 will be caught between a bit of a rock and a hard place, with rents becoming less affordable as they rise faster than wages, but home prices rising even faster than rents,” said Daren Blomquist, vice president at RealtyTrac. “In markets where home prices are still relatively affordable, 2016 may be a good time for some renters to take the plunge into homeownership before rising prices and possibly rising interest rates make it increasingly tougher to afford to buy a home,” Blomquist added. Source: HousingWire

The latest S&P/Case-Shiller Home Price Index shows that nationally, prices were up 5.2 per cent in October 2015 compared to a year earlier. That’s an increase from the 4.9 per cent rise recorded in September. San Francisco, Denver and Portland, Oregon all saw 10.9 per cent increases year-over-year and the top 20 percent increased 5.5 per cent overall to return to their winter 2007 levels. However, even in those cities, prices are around 13 per cent below their 2006 peak. Source: National Mortgage Professional

Americans significantly lack understanding about minimum home financing qualification criteria, particularly renters who plan to buy a home within the next five years, according to a survey of 3,868 consumers by Fannie Mae's Economic & Strategic Research Group. When asked about key qualification criteria — down-payment percentages, borrower's credit scores, and debt-to-income ratios — about half of consumers answered with "don't know" or failed to provide a valid answer, according to the survey. For those consumers who did provide an answer, many respondents thought the requirement for a minimum down payment was four times larger than Fannie Mae's actual figure of 3 percent. When it came to minimum credit scores, many thought the requirement was 652 — when in actuality, Fannie Mae's requirement is 620. Mark Palim, Fannie Mae's vice president of Applied Economic and Housing Research, noted: "Advancing from aspiration to sustainable home ownership is more likely to occur if consumers have an accurate understanding of the requirements to qualify for a home loan. Source: Fannie Mae

Articles and commentary are provided for general information only and should not be relied on as legal or financial advice

Courtesy to Jim Power at Sandstone Financial.