Creating A New Definition Of Affordable
A report from AZ Big Media in Arizona. “Last year was good for Arizona’s residential real estate market with boosted home sales, prices, and agents making deals. One noticeable shift in 2017 was that Millennials are now reaching a point of financial well-being. According to Homeowners Financial Group, a local mortgage banker specializing in the residential market, this transition is made easier by recent changes to conventional loan limits, which are allowing more first-time homebuyers into the market. Joe Conner, branch manager and licensed mortgage professional for HFG says, ‘The loan limit has been raised from $424,100 to $453,100, meaning that home buyers can purchase a more expensive home at a higher price point and still qualify for a loan.’”
“Another subgroup showing signs of growth is in the older population that lost their homes during the financial crisis or sold out of necessity and began renting instead. ‘Recently, credit agencies have changed their policies, choosing not to report certain judgments and liens on credit,’ Conner says. ‘This can improve people’s credit scores, enabling buyers to get better interest rates and qualify when they may not have been eligible previously.’”
“For the first 10 months of 2017, 12 percent more construction permits were issued than in 2016, with a projected yearly total of 21,200. By 2018, that number is expected to be 23,500, and it could be 25,400 by 2019. Fulton Homes is outwardly optimistic for 2018, according to CEO Doug Fulton. ‘We see 2018 as a year we’ll be able to hang our hats on. All leading economic indicators look great and the trends in sales are surprisingly solid even in our typically slow months of November and December,’ says Fulton. ‘It’s time again to bet on housing.’”
The Sacramento Bee in California. “It’s tough to be a first-time homebuyer in the Sacramento region these days. One area that’s changed, however, is the availability — and acceptability — of low down payment mortgages for those who can’t pony up the traditional 20 percent or even 10 percent. The government-backed programs mainly are offered through private lenders. They include old standbys such as Federal Housing Administration mortgages that require 3. 5 percent down and newer zero-interest loans and grant programs that can greatly increase a buyer’s down payment – in one case tripling it for free.”
“National lender Guild Mortgage’s Monty Maxwell, one of the state agency’s ‘preferred loan officers,’ met Michelle Schroeder, an art teacher, at a high school in Natomas where they were both mentoring students. Maxwell and his team members helped Schroeder buy her first house. After examining Schroeder’s options, including a CalHFA program that assists teachers and school employees, they ended up going with one of Guild’s own down-payment assistance programs, the Guild 1% Down Loan. It gives buyers who qualify an extra 2 percent grant that doesn’t need to be repaid. That means for example, that a couple buying a $300,000 house who put $3,000 down would actually have $9,000, or 3 percent, to put down.”
“She offered the asking price of $325,000, which was near the top end of her budget. The seller accepted, and the deal closed in January. Schroeder said her 30-year mortgage rate is 4.25 percent. ‘The payment’s a little high … but it’s doable,’ Schroeder said. Like many people her age, she’s still paying down her student loans from college, which limits her housing budget.”
The Daily Free Press in Masschusetts. “First-time home buyers may face some financial relief thanks to a new program from MassHousing. The program will benefit these buyers by financing a down payment of 3 percent of the price they purchased the house for, or $12,000, whichever is less. Borrowers will later have to pay back the cost of the down payment with a low-cost secondary mortgage requiring no cash up front. Kevin Kielt, 34, of South Boston, said he would appreciate financial support to fund a down payment because he has struggled with finding an affordable home.”
“‘Speaking for myself, it’s been hard for my girlfriend and I to get the money to make a down payment on a house because we both have student loans to pay off still,’ Kielt said. ‘We’re both in fairly good positions … It’s just that we have a lot of other things to worry about and care about in terms of money.’”
From Colorado Hometown Weekly. “How expensive has housing gotten in Boulder County? So pricey that creating a new definition of affordable wasn’t enough to move the needle in an annual affordability study. The Longmont Housing Affordability Review has been produced since 2013 by Kyle Snyder, with First American Title, and Amy Aschenbrenner, CEO of the Longmont Association of Realtors. The 2017 report was the first in the study’s history in which the definition of affordable homes was revised upward, to $350,000 for single-family and $270,000 for a condo or townhome.”
“The change was necessary because of the dearth of houses selling under the old thresholds of $150,000 for a condo/townhome and $250,000 for a single-family, as Snyder noted in last year’s report. But even with the new goal posts in place, there was little affordability to be found in Boulder County’s housing market.”
“Even still, homes are more affordable than they have been since the dawning of the new millennium, argues Mark Fleming, chief economist at First American Financial Corporation, whose voice is another addition to report. When accounting for rising incomes and historically low interest rates, Americans have more purchasing power than in the booms of 2000 and 2006, Fleming said. Real estate site Trulia also found that homes were more affordable to more Americans than any time in the past 40 years.”
“‘In 2016, the median household could afford a home 1.5 times more expensive than the median home price,’ the report read. ‘In 1980, the median household could only afford about 3/4 of the median home price.’”
“The report’s metrics will continue to evolve along with the market. Instead of a set figure for affordability, the annual review will calculate area median income and then reverse engineer what a buyer would likely be able to afford at current interest rates,assuming a 5 percent down payment. (So chosen because of Colorado Housing and Finance Authority’s down payment assistance program for lower-income buyers.) ‘The measuring stick will be slightly different every year but will still measure the same ability to buy in the market,’ Snyder said. ‘We’re really happy about that because we’ll never outgrow our measuring stick again.’”
“Still, he acknowledges that the change in parameters isn’t good news for everybody. Many residents haven’t experienced an increase in buying power: stagnating wages and rocketing prices put homes well beyond their reach, even at rock-bottom prices. To that group, the report’s changes may come as a bit of a shock. Last year’s study boldly claimed ‘there are no entry level housing options,’ while Snyder said this year he ‘really tried to make sure we didn’t have a tone’ and present the numbers as neutrally as possible.”
“This year’s report is ‘less dire because our perspective has changed. That’s the risk you take in changing the measuring stick.’”
From WBFO in New York. “So far this year, nearly 500 foreclosure applications have been filed in Erie County. That is why County Clerk Mickey Kearns has been pushing so hard for his program to tell people they do not have to move out and to help local governments deal with the notoriously complicated foreclosure process. An unclear number of people unnecessarily leave when the foreclosure starts, leaving the home empty and vulnerable. Kearns said there are foreclosures pending in Erie County for 12 years and some are never perfected, leaving ownership foggy and the building deteriorating into a zombie home.”
“He said the house needs to be handled quickly to preserve its value. ‘That’s the best time to come up with a strategy and a game plan to help those people, so we’re helping the homeowner to stay within the home, to come up with a strategy, whether it’s a short sale or selling the property or coming up with a game plan,’ Kearns said. ‘We’re helping the neighbors, since now their property values are not going into decline.’”
