- Vacation Home Sales were up 57.4% in 2014
- 1.13 Million Vacation Homes Sold
- 2014 marked the highest level of sales in the U.S. since 2003
Everyone knows the social advantages of home ownership. However, some question the financial benefits of owning a home. Three recent studies shed some light on the issue.
RealtyTrac recently released a report comparing home price appreciation to wage growth over the last two years. The study revealed that home price appreciation has outpaced wage growth in 76% of U.S. housing markets during that time period. By how much? Here is a graph showing their findings:
And we all know the importance of home appreciation in determining the net wealth of most American families. Merrill Lynch just issued a report covering the issue. Their findings are shown here:
It obviously makes financial sense to be a homeowner.
The survey company Pulsenomics just issued their findings on the cost of owning versus the cost of renting. They compared historical averages to the cost you can expect to pay today.
The cost of buying is far below historical averages. Renting is another story.
Every seller wants to get the best price for their house. We learned in high school that the best price for any item will be determined by the demand for that item relative to the supply of that item.
The National Association of Realtors just released their 2015 Investment and Vacation Home Buyers Survey which revealed that vacation home sales boomed in 2014 to above their most recent peak level in 2006.
NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales:
“Affluent households have greatly benefited from strong growth in the stock market in recent years, and the steady rise in home prices has likely given them reassurance that real estate remains an attractive long-term investment. Furthermore, last year’s impressive increase also reflects long-term growth in the numbers of baby boomers moving closer to retirement and buying second homes to convert into their primary home in a few years.”
The report shows:
If you have been considering a waterfront condo at the beach, that ranch in the foothills or that special getaway you someday will retire to, maybe now is the time to act. Prices are good and mortgage rates are at historic lows. Contact a local real estate professional to help you put your dreams to a plan.
If you are debating purchasing a home right now, you are surely getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in real estate. Let’s look at whether or not now is actually a good time for you to buy a home.
There are 3 questions you should ask before purchasing in today’s market:
This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with finances.
A study by the Joint Center for Housing Studies at Harvard University reveals that the four major reasons people buy a home have nothing to do with money:
What non-financial benefits will you and your family derive from owning a home? The answer to that question should be the biggest reason you decide to purchase or not.
When looking at future housing values, Home Price Expectation Survey provides a fair assessment. Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts and investment & market strategists about where prices are headed over the next five years. They then average the projections of all 100+ experts into a single number.
Here is what the experts projected in the latest survey:
A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by an increase in mortgage rates.
The Mortgage Bankers Association (MBA), the National Association of Realtors and Freddie Mac have all projected that mortgage interest rates will increase by approximately one full percentage over the next twelve months.
Only you and your family can know for certain the right time to purchase a home. Answering these questions will help you make that decision.
There has been a lot of discussion about how difficult it is to get a home mortgage in this market. There is no doubt that the process is not as easy as it was eight to ten years ago and that’s probably good news. However, it does appear that availability to mortgage money is increasing with each passing day.
The Mortgage Bankers’ Association publishes the Mortgage Credit Availability Index (MCAI). According to their site the index is “a summary measure which indicates the availability of mortgage credit at a point in time”. As we can see from the graph below, mortgage availability has been increasing dramatically over the last six months.
Accompanying the latest index was this comment from Mike Fratantoni, MBA’s Chief Economist:
“A number of factors contributed to a loosening of credit in March: Freddie Mac’s introduction of their 97 LTV program (Fannie Mae’s was implemented in December) [and the] additional loosening of parameters on jumbo loan programs… Although credit remains tight by historical standards, this increase in availability, coupled with low rates and job market strength, should lead to stronger home purchase activity this spring.”
If you have remained on the sidelines regarding homeownership because you were concerned about your ability to qualify for a mortgage, it may be time to get into the game.
According to Nationwide’s recently unveiled, Health of Housing Market (HoHM) Report, the US housing market is at it’s healthiest levels since the index’s creation in 2001.
The index analyzes the health of the housing market across the country and in 373 metro areas every quarter. Using the data that they have collected over the past 15 years, Nationwide will look to give a “data-driven view of the near-term performance of housing markets based upon current health indicators.”
The fourth quarter of 2014 ended with the highest indicator score in over 15 years of data analyzed by the study at 109.8. The report explains:
“An index value over 100 suggests that the national housing market is healthy, with lower chances of a housing downturn over the next year as the index moves increasingly above the 100 breakeven value.”
Employment, demographics, the mortgage market, and housing prices are all used to evaluate the health of each market. The top 10 healthiest housing markets according to the index are:
The two ‘least healthy’ markets were Bismark, ND and Atlantic City, NJ who received “just slightly negative performance rankings”.
David Berson, Nationwide’s Chief Economist and Senior Vice President, says “the quarterly report should serve as a resource to gauge how healthy housing markets are today but, perhaps more important, what to expect in the future and why.”
The housing market continues to recover and surpass recent history. Meet with an agent in your local market to determine if you are able to take advantage of the opportunities available in real estate today.