Recent Blog Posts
The Lesson of Megan
This upcoming weekend, my daughter Megan, the eldest of our four children is graduating from Binghamton University. When these type of life events happen, I like to reflect upon both “How did we get here?” and “What are the best actions I can take to make sure things stay on the right path?” As I thought about it, parallels to people thinking about buying a home popped into my head.
The “How did we get here?” question had me pondering the time before Megan was conceived. There were plenty of reasons NOT to pull the trigger- with economic uncertainty being the leading concern. How would we pay for the increased expenses with less of an income? How would our personal time be compromised? Shouldn’t we wait until we had more in our savings account? If we applied conventional wisdom to our situation, we would have waited; but by not waiting, the benefits we gained were far greater than we ever imagined. Being a parent (especially of a kid like Megan) is the greatest gift anyone can have…and cheating ourselves of that, for even a day, would have been a tragedy. Sure, we sacrificed some vacations or nights out, but the joy of beginning our family (which later added three sons to the mix) gave us such an upgraded life. I can hardly remember the drawbacks and can only celebrate the great memories of laughter, song, and hugs.
So, my advice to people looking to take somewhat of a leap of faith into homeownership (or moving up) is that if you wait for everything to be perfect, you will cheat yourself of the memories you could be starting today. Seriously, what a terrific opportunity to start the new chapter of your future:
- Incredible Inventory – The amount of available homes to choose from is staggering, but waiting for the “perfect” house is costing you time….the time you will enjoy your home.
- Amazing Prices – In some parts of the country, prices are back to 2005 levels, some 2003, and some even 2001. What else can you buy for the same price as 7-11 years ago? Maybe some personal electronic equipment that is outdated today.
- Awesome Interest Rates – Rates are back to all time lows. What are you waiting for?
Now, I’ll move to the “What are the best actions I can take to make sure things stay on the right path?” question. Megan wants to be a teacher. She will be a great teacher, but jobs on Long Island are tough to find with all the budget cuts and such. So, Megan has decided to continue her education and get her Masters, while working at our office, as she waits for improvements in the job market. She is positioning herself to be better prepared for her future opportunities. Good decision.
As I talk to prospective homebuyers, it’s about being pre-approved. Having a seasoned mortgage professional review their income, assets and credit to help position them in the best light, so that when they find that special opportunity, they are poised to act on it.
Buying a home, many times, begins with the emotional decision to change one’s life. After deciding to take the plunge, we use numbers and logic (inventory, affordability, and interest rates) to justify the emotion. Add to that, taking the care to prepare by working for a solid pre-approval, and I want to tell everyone…. “Go make your Megan!”
Average U.S. Households Almost Out of Financial Distress
The Consumer Distress Index, published by CredAbility, found that the average U.S. household is under less financial stress these days, most likely due to factors such as added jobs and the mild winter weather this year.
Overall, U.S. households scored 69.9 out of 100 points, with a score under 70 indicating a state of financial distress. While still 0.1 points shy of beating the non-distress category, the score is an improvement from the previous quarter’s 67.6.
Also, 69.9 is the highest score since the 2008 third quarter and the 2.3 point increase from the previous quarter is the highest quarterly jump in seven years.
The index measures financial distress by taking into account five categories: employment, housing, credit, how families manage household budgets, and net worth.
“At long last, the average U.S. household is on the verge of moving out of financial distress,” said Mark Cole, chief operating officer of CredAbility and author of the index.
Cole added that while finances are still tight, so long as gains in employment and housing continue, the financial health of the average U.S. household will further stabilize.
CredAbility started measuring distress among households in the 25 largest metro statistical areas (MSAs) for the first quarter of 2012.
The five MSAs in the most financial distress were Tampa-St. Petersburg (57.9), Detroit (60), Miami-Fort Lauderdale-West Palm Beach (61.5), Atlanta (62.6), and Los Angeles, (62.7). All five areas lag the nation in employment and housing, accounting for their low scores.
The MSAs under the least amount of distress were Washington, D.C (74.1), Boston (73.1), Minneapolis-St. Paul (72.4), Honolulu (71.8), and Dallas-Fort Worth (70.1).
One common characteristic of the six most distressed MSAs was they all had financial distress scores under 50 in the employment category, with Los Angeles at the bottom with a score of 39.5.
Among the 50 states, the most distressed were Nevada (61.66), Georgia (64.04), Michigan (64.75), Mississippi (65.06) and Florida (65.70).
The states in the least amount of distress were North Dakota (84.01), South Dakota (80.21), Wyoming (79.21), Nebraska (79.18), and Vermont (77.75).
Overall, 28 states scored 70 or above during the first quarter.
Article courtesy of DSNews.com. CredAbility is a nonprofit credit counseling and education agency.
Higher Home Prices Expected by Consumers in 2012
Higher home prices are expected by 33% of consumers over the next year.
Fannie Mae’s monthly housing survey indicated 5% more people expect home prices to increase this month over the 27 percent surveyed last month who thought prices would increase this year.
Nearly half of consumers expect higher rental prices as well, the highest number registered by Fannie Mae since its monthly tracking began in June 2010. Americans’ rental price expectations for the next year continue to rise, reaching their record high level for the Fannie Mae survey this month.
The percentage of respondents who say it is a good time to buy rose by three points to 73 percent, the highest level in more than a year, while the percentage of respondents who say it is a good time to sell rose one point to 14 percent this month.
Consumers’ confidence about their own finances is stabilizing, with 44 percent expecting an improvement over the next year.
Higher Mortgage Rates Expected
There is an increasing share of consumers expecting both higher mortgage rates and home prices over the next 12 months.
Doug Duncan, Vice President and chief economist of Fannie Mae says, “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month.”
Duncan says, “Some may feel that renting is becoming more costly and that home ownership is a more compelling housing choice. Conditions are coming together to encourage people to want to buy homes.”
While the “sales of existing homes in January and February marked the strongest start to a year since 2007,” according to the combined Housing and Urban Development (HUD)/Treasury statement. “Data on home prices changed little from the previous month – marking a fifth month of seasonal lows.”
For further Fannie Mae survey findings, visit the Fannie Mae Monthly National Housing site.
