Are You Still Renting? It Has Cost You $41,000!

DSC_0002-EditAccording to Lawrence Yun, chief economist for the National Association of Realtors, renters have missed out on over $41,000 by not buying 3 years ago when the prices were the lowest.  The annual median home price in 2011 was $166,100 and in 2013 $197,100.  The median national home price this year is expected to hit $207,000.  Therefore, as a renter your landlord’s property has increased in value each year and by the end of this year will have increased $41,000 in value while you continue to help pay his mortgage!

However, this is not all the fault of the renters.  The percentage of first time buyers is shrinking in the market place.  In a normal market there would be about 40% of buyers as first time buyers, now there is only 27%.  An unfortunate problem for first time buyers is that they are saddled with student loan debt and job creation and income have risen very slowly.  The new Qualified Mortgage (QM) rules that took effect this year won’t help either.  These rules were put in place to ensure that lenders don’t make bad loans but it tightens the restrictions on student loan debt and other debt loan applicants can carry.  This might force even more first time buyers out of the market.

Lawrence Yun thinks there are two situations to be tackled for first time buyer ratios to get back closer to normal.  First, the impact of the Qualified Mortgage rules must be monitored to see if lenders are being too risk adverse.  Yun thinks that it a good possibility because mortgage default rates have been at historic lows in the last few years.  Secondly, builders need to step up their home building and bring construction levels more in line with historic norms.  I have written recently about new home communities and over 30 are planned for the Naples area and under construction.  However, we need some builders to come into the area and build 100_8810affordable homes for first time buyers as well as the second home buyers and snowbirds.

Yun feels housing is underperforming in the market place.  In 2000 when the market was steady and boring there were 5.2 million existing home sales and 1.6 million homes were built that year.  Today, we struggle to reach 5 million homes sold nation wide and new home starts only total about 1 million.  Yet there are 34 million more people in the country and mortgage rates are historically low.  More first time buyers should be able to qualify to buy and get out of that rental home!100_3226

I love working with first time buyers and I have a young couple anxiously awaiting their closing date in April on their new home.  We were able to find them a bank owned home that qualified as a single family home so they were able to take advantage of the USDA 100% financing program.  Their monthly mortgage payment will be lower than they were paying in rent!  There is still homes available in the Naples area for first time buyers who can qualify for a mortgage.  I work with  a very good mortgage broker who can almost always find some way of financing my customers.  If not right now at least he can work with them to make the necessary adjustments to their credit and in six months to a year they are able to buy.  Don’t throw your money away on renting, call me at 239-601-3174 and let’s get the party started

Remember it is always toasty in Naples and you deserve your piece of Naples sunshine and a home of your own!

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