The real estate market then, now, and tomorrow can leave a lot to be desired. I think everyone grows up with the dream of someday owning their first home. The memories that come to mind are warm and fuzzy, as you could then purchase a nice big home for under $250,000. We owned a 4 bedroom two ½ bathroom home, over 3,000 sq. feet for $259,000. Our first home, which we purchased 10 years earlier, was 4 bedrooms, 2 baths, 1,900 sq. feet, and we purchased that home for $84,000.00. Although I am talking about decades ago, it’s sad to see how crazy expensive life has gotten.
As recently as January 2022, a family whose household earnings were $71,000.00, when purchasing a home with a 20% down payment could afford a home priced at $448,700.00. That was possible since then the interest rates were 3.1% at their highest. Today, just 9 months later, the same family could only afford to buy a home priced at $341,700.00 due to the high interest rates of 7% (plus.)
There are numerous payment estimators that will let you figure out where you are financially, and what you can afford. There are also programs that help in estimating mortgage affordability based on several scenarios. You will also be able to see an amortization schedule which is great for people that are visual.
In today’s real estate market, I honestly don’t know how people can afford to buy their first home, let alone any home. The interest rates continuing to climb also don’t help. Anyone to even begin to qualify for a loan must make close or above a six-figure income. A house that should be valued at $400,000.00 is being sold for over $700,000.00. Just 5 years ago, a house would increase in value under $10,000 dollars over a period of 6 years. Today, houses increase at an average of $300,000-$400,000 in a matter of months.
It’s difficult to predict what the real estate housing market will be in the future, but I hope that homeowners begin to be realistic and not expect people to pay a fortune for a shack. As a realtor, its sometimes hard to accept what people are asking for their properties. Don’t get me wrong, some properties are well worth it, but others are just not. I’m all about getting top dollar for your property, but it must be worth it.
If you are trying to work this market and purchase your first home, don’t despair. The market is slowing down a bit and houses are not flying off the market as they were a couple months ago. Although interest rates are high, I recommend purchasing the home you can afford and then refinancing when the interest madness goes back down. At least you will have locked in your dream home.
Most importantly, stay tuned to financial news sites like Bloomberg or The Wall Street Journal to name a couple. There are no many others out there you can search. Also remember to calculate your budget so that you don’t waste time looking at homes outside of your comfort zone. If you plan it out right you will not miss out on the perfect opportunity.
So what is your story regarding this real estate market? Do you blame Covid for the madness? Are you renting or do you own your home?
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