Will Housing Affordability Be A Challenge In 2017?

Some industry experts are saying that the housing market may be heading for a slowdown in 2017 based on rising home prices and a jump in mortgage interest rates. One of the data points they use is the Housing Affordability Index, as reported by the National Association of Realtors (NAR).

Here is how NAR defines the index:

“The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national level based on the most recent price and income data.”

Basically, a value of 100 means a family earning the median income earns enough to qualify for a mortgage on a median-priced home, based on the price and mortgage interest rates at the time. Anything above 100 means the family has more than enough to qualify.

The higher the index, the easier it is to afford a home.

Why the concern?

The index has been declining over the last several years as home values increased. Some are concerned that too many buyers could be priced out of the market.

But, wait a minute…

Though the index skyrocketed from 2009 through 2013, we must realize during that time the housing crisis left the market with an overabundance of housing inventory with as many as one out of three listings being a distressed property (foreclosure or short sale). All prices dropped dramatically and distressed properties sold at major discounts. Then, mortgage rates fell like a rock.

The market is recovering, and values are coming back nicely. That has caused the index to fall.

However, let’s remove the crisis years and look at the current index as compared to the index from 1990 – 2008:

We can see that, even though prices have increased, mortgage rates are still lower than historical averages and have put the index in a better position than every year for the nineteen years before the crash.

Bottom Line

The Housing Affordability Index is in great shape and should not be seen as a challenge to the real estate market’s continued recovery

Five Reasons Why Homeownership Is A Good Financial Investment

According to a recent report by Trulia, “buying is cheaper than renting in 100 of the largest metro areas by an average of 37.7%.” That may have some thinking about buying a home instead of signing another lease extension. But, does that make sense from a financial perspective?

In the report, Ralph McLaughlin, Trulia’s Chief Economist explains:

“Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”

The report listed five reasons why owning a home makes financial sense:

1. Mortgage payments can be fixed while rents go up.
2. Equity in your home can be a financial resource later.
3. You can build wealth without paying capital gains.
4. A mortgage can act as a forced savings account.
5. Overall, homeowners can enjoy greater wealth growth than renters.

Bottom Line

Before you sign another lease, perhaps you should sit with a real estate professional in your area to better understand all your options.

How to Downsize in Greenwich Without Compromising

Having the opportunity to market and show Milbank Court, a wonderful in-town community of 17 town homes located in downtown Greenwich CT, I have learned that many of today’s buyers are looking to simplify their lives and homeownership responsibilities.

Some of the buyers I have met are interested in downsizing out of a larger home, stating they are “empty nesters” as their children have moved on. They still need a guest room or two for out-of-town visitors. Some have grand children who need play space. Many of these buyers are also interested in lowering their property taxes so I encounter a lot of people coming from New York State. Some of them are multiple homeowners and will only spend part of the year in Greenwich. Everyone wishes to lose the property maintenance that a larger home with land requires.

Milbank Court has many solutions for the downsizing buyer, offering easy living in a community close to downtown Greenwich and all that has to offer. As most of you know, downtown Greenwich has a multitude of restaurants, shops, parks with tennis courts, a ferry that takes passengers to the local islands and beaches, Metro North train to NYC, local gym’s including the new YMCA -- all within walking distance.

Each unit is delivered complete with a fresh renovation offering the best in today’s interior finishes. Each home is an end unit featuring light and bright interior spaces. The buyers are pleased to find the brand new bathrooms and fresh clean kitchen exhibiting honed marble counter tops and stainless steel professional grade appliances. Three to four bedroom units include a finished lower level space with a full bathroom and laundry.  Multiple windows bring in natural light. This turn key  offering allows the buyer to move right without the hassle of costly updates.

Unique to the townhouse marketplace, Milbank Court offers private outdoor space. Buyer’s have been delighted to find a covered front porch that makes a nice sitting area and a separate patio ideal for a table and grill. Mature landscaping and gardens throughout the grounds create a lush presentation.

Importantly, the property taxes are about $10,000 a year and common charges only around $500 a month based on the size of the unit which takes care of the landscaping, snow removal, refuse collection, some building maintenance and more. This allows the home owner freedom to travel and enjoy their second home.

Low property taxes and common charges coupled with a turn-key renovation and low maintenance makes for an easy solution for those interested in downsizing and simplifying.

The price point is attractive compared to the Greenwich real estate marketplace with units priced from $1,795,000 to $2,050,000. First Republic Bank has a loan package for qualified buyers. Find more information and view the various floor plan options at www.milbankcourt.com.