Wild Market, Should You Buy A Home Today?

Is Buying a Home Today a Good Financial Move?

There’s no doubt 2020 has been a challenging year. A global pandemic coupled with an economic recession has caused heartache for many. However, it has also prompted more Americans to reconsider the meaning of “home.” This quest for a place better equipped to fulfill our needs, along with record-low mortgage rates, has skyrocketed the demand for home purchases.

This increase in demand, on top of the severe shortage of homes for sale, has also caused more bidding wars and thus has home prices appreciating rather dramatically. Some, therefore, have become cautious about buying a home right now.

The truth of the matter is, even though homes have appreciated by a whopping 6.7% over the last twelve months, the cost to buy a home has actually dropped. This is largely due to mortgage rates falling by a full percentage point.

Let’s take a look at the monthly mortgage payment on a $300,000 house one year ago, and then compare it with that same home today, after it has appreciated by 6.7% to $320,100:Compared to this time last year, you’ll actually save $87 dollars a month by purchasing that home today, which equates to over one thousand dollars a year.

But isn’t the economy still in a recession?

Yes, it is. That, however, may make it the perfect time to buy your first home or move up to a larger one. Tom Gil, a Harvard trained negotiator and real estate investor, recently explained:

“When volatile assets are facing recessions, hard assets, such as gold and real estate, thrive. Historically speaking, residential real estate has done better compared to other markets during and after recessions.”

That thought is substantiated by the fact that homeowners have 40 times the net worth of renters. Odeta Kushi, Deputy Chief Economist for First American Financial Corporation, recently said:

“Despite the risk of volatility in the housing market, numerous studies have demonstrated that homeownership leads to greater wealth accumulation when compared with renting. Renters don’t capture the wealth generated by house price appreciation, nor do they benefit from the equity gains generated by monthly mortgage payments, which become a form of forced savings for homeowners.”

Bottom Line

With home prices still increasing and mortgage rates perhaps poised to begin rising as well, buying your first home, or moving up to a home that better fits your current needs, likely makes a ton of sense.

An Email I Sure Didn't Want to Get

I've been working with a couple for a little bit now. We went to see something outside the box yesterday. We drove in separate cars. We wore masks and gloves the entire time we were in the home. I take my gloves & mask off inside out and leave any germs tucked inside those little buggers and throw away when I get home.

After that appointment, I went over to see another client. Sanitized my hands as I was getting out of my car. Put another mask on. They were wearing masks as well.

Later last night I received an email from the listing agent from the outside the box home I showed earlier in the day. This was from her seller.

"I want to let you know that I found out today that a person who I had contact with recently tested positive for Covid-19.   My last contact with that person was 37 hours ago.  That person was staying at my house for 6 days prior to leaving at 3:30am Wednesday morning."

So after a few, 'Oh crap' comments, I forwarded the email to the buyers that came in the house, called them as well to alert them. Called my office manager. And, then forwarded the email to the client I saw afterwards and called her as well. She's a nurse and works testing Covid all day long. I said a few more Oh Craps to her and she put me at ease. She reminded me that I did everything right, that I wasn't in direct contact with the Covid person (the house was vacant when we went in), and that per the CDC I would have had to be in direct contact with that person, less than 6ft away and/or have touched something that person touched in the last 15 minutes to be considered exposed.

So, the purpose of this post? To remind you to be vigilant. To follow the rules when viewing or showing homes. To be very careful with yourself and the people you are responsible for. I can't control everyone, but I can control the clients I work with & they are definitely following the rules.

This is going to be around for a while. Make sure the agent you're working with is following the guidelines for the safety of themselves, you, and your family.

That 15K Biden is Suggesting May, or May Not, Be A Great Thing.....

Read an article from one of my housing drips and I'm just copying and pasting here so you know it's not just my opinion but from the National Association of Realtors.

It does, however, make complete sense to me.

"The news over the weekend that former Vice President Joe Biden is now president-elect elicited positive reactions from several real estate leaders who saw the upside for the housing market.

Biden’s housing proposals include a $15,000 first-time homebuyer tax credit and he will focus on fair housing and affordable housing issues. He is also likely to appoint a new head of the Federal Housing Finance Agency.

The National Association of Realtors Chief Economist Lawrence Yun told HousingWire that the $15,000 tax credit is good news since it can go a long way in terms of helping first-time homebuyers and minority households. However, that’s only one part of the solution.

“But that’s not the full story, the full story is that stimulating the demand just by itself I think is insufficient,” Yun said. “Right now the housing market is facing a significant housing shortage. So if we add further stimulus to the demand without addressing the supply… it will simply bump up the prices even higher.”

Yun said that the ongoing housing supply shortage is getting worse and not enough homes are being built to face the demand.

“We simply have not been building a sufficient amount of homes,” Yun said. “We also need to address the supply side, how do we bring more supply? It’s going to take some time, but just adding more fuel to the housing demand without addressing the supply would just simply mean that home prices could accelerate much higher and partly negating some of the benefits of the $15,000 tax credit.”"

Back to me now. I do love tax credits for first time buyers, it's helped many of my clients in the past. But, I am not a fan of it until we get more homes on the market, because, like Yun says.....we'll just drive up prices more with more demand if there is 15k in someones pocket to buy. We Need More Inventory.