Rachael Nol Homes

How Misunderstandings about Affordability Could Cost You There’s a lot of discussion about affordability as home prices continue to appreciate rapidly. Even though the most recent index on affordability from the National Association of Realtors (NAR) shows homes are more affordable today than the historical average, some still have concerns about whether or not it’s truly affordable to buy a home right now. When addressing this topic, there are various measures of affordabili...ty to consider. However, very few of the indexes compare the affordability of owning a home to renting one. In a paper just published by the Urban Institute, Homeownership Is Affordable Housing, author Mike Loftin examines whether it’s more affordable to buy or rent. Some points to consider: 1. Renters pay a higher percentage of their income toward their rental payment than homeowners pay toward their mortgage. 2. Renters don’t have extra money to invest in other assets. 3. Your mortgage payment remains relatively the same over time. Your rent keeps going up. 4. If you want to own a home and can afford it, waiting could cost you. Bottom Line: Homeownership is the first rung on the ladder of financial success for most households, as their home is most often their largest asset. If the current headlines reporting a supposed drop-off in home affordability are making you nervous, let’s connect to go over the real insights into our area.

Buying a Home Is Still Affordable The last year has put emphasis on the importance of one’s home. As a result, some renters are making the jump into homeownership while some homeowners are re-evaluating their current house and considering a move to one that better fits their current lifestyle. Understanding how housing affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down the optimal window of time in which to ma...ke a purchase. There are three main factors that go into determining how affordable homes are for buyers: Mortgage Rates Mortgage Payments as a Percentage of Income Home Prices Why are homes so affordable today? Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it’s more affordable to buy a home today than at any time in the last eight years. If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Americans See Real Estate as a Better Investment Than Stocks or Gold Last month, in a post on the Liberty Street Economics blog, the Federal Reserve Bank of New York noted that Americans believe buying a home is definitely or probably a better investment than buying stocks. Last week, a Gallup Poll reaffirmed those findings. In an article on the current real estate market, Gallup reports:... Gallup usually finds that Americans regard real estate as the best long-term investment among several options seeing it as superior to stocks, gold, savings accounts and bonds. This year, 41% choose real estate as the best investment, up from 35% a year ago, with stocks a distant second. Is real estate really a secure investment right now? Some question American confidence in real estate as a good long-term investment right now. They fear that the build-up in home values may be mirroring what happened right before the housing crash a little more than a decade ago. However, according to Merrill Lynch, J.P. Morgan, Morgan Stanley, and Goldman Sachs, the current real estate market is strong and sustainable. As Morgan Stanley explains to their clients in a recent Thoughts on the Market podcast: Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course. Bottom Line: America’s belief in the long-term investment value of homeownership has been, is, and will always be, very strong.

Experts Say Home Prices Will Continue to Appreciate It’s clear that consumers are concerned about how quickly home values are rising. Many people fear the speed of appreciation may lead to a crash in prices later this year. In fact, Google reports that the search for When is the housing market going to crash? has actually spiked 2450% over the past month. To alleviate some of these concerns, let’s look at what several financial analysts are saying about the current resident...ial real estate market. Within the last thirty days, four of the major financial services giants came to the same conclusion: the housing market is strong, and price appreciation will continue. Here are their statements on the issue: Goldman Sachs’ Research Note on Housing: Strong demand for housing looks sustainable. Even before the pandemic, demographic tailwinds and historically-low mortgage rates had pushed demand to high levels. consumer surveys indicate that household buying intentions are now the highest in 20 years. As a result, the model projects double-digit price gains both this year and next. Joe Seydl, Senior Markets Economist, J.P.Morgan: Homebuyersinterest rates are still historically low, though they are inching up. Housing prices have spiked during the last six-to-nine months, but we don’t expect them to fall soon, and we believe they are more likely to keep rising. If you are looking to purchase a new home, conditions now may be better than 12 months hence. Morgan Stanley, Thoughts on the Market Podcast: Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course. Merrill Lynch’s Capital Market Outlook: There are reasons to believe that this is likely to be an unusually long and strong housing expansion. Demand is very strong because the biggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle. Coronavirus-related preference changes have also sharply boosted home buying demand. At the same time, supply is unusually tight, with available homes for sale at record-low levels. Double-digit price gains are rationing the supply. Bottom Line: If you’re concerned about making the decision to buy or sell right now, let’s connect to discuss what’s happening in our local market.

Congratulations to Rachael Hunault Nol for being our Moreno Valley office Top Producing Agent!

The Difference a Year Makes for Homeownership Why 2020 Was a Great Year for Homeownership Last year, the average mortgage rate was 3.93% (substantially higher than it is today). If you waited for a better time to make a move, market conditions have improved significantly. Today’s low mortgage rates are a huge perk for buyers, so it’s a great time to get more for your money and consider a new home.... Bottom Line If you’ve been waiting since last year to make your move into homeownership or to find a house that better meets your needs, today’s low mortgage rates may be just what you need to get the process going. Let’s connect today to discuss how you may benefit from the current rates.

2021 Housing Forecast