The Discrepancy In Housing Affordability
Chicago, IL (PRWEB) February 22, 2014 -- The February 20th Market Pulse report from Corelogic gives prospective home buyers and lenders alike a reality check of the affordability of real estate in the United States. Some facts were positive, some were negative; Peoples Home Equity discusses this first section of the report.
Home ownership has declined from 69.2% in the 4th quarter of 2004 to 65.3% in the 3rd quarter of 2013. While the affordability of homes has risen, giving Americans an opportunity to purchase a property, it’s done so more in the favor of existing homeowners rather than first-time home buyers. This news comes during a critical time where lenders know home price indices and sales depend more on the participation of first-time home buyers. The discrepancy is largely caused by the difference in down payment required from an existing home owner than a first-time home buyer. Existing home owners may only need to put 5% down payment where as a first-time home buyer, which is usually younger and known spend rather than save, must place a 20%-25% down payment! Existing homeowners are also able to transfer home price gains from one property to the other. In the case of a first-time home buyer, increases in home prices are detrimental. These forces effect the affordability of one group more than the other as Corelogics graph shows an approximate decline in affordability for first time home buyers of -23% from December 2012 to October 2013, a decline of only -10.5% for existing homeowners.
Peoples Home Equity thinks the market is headed in the right direction as unemployment is declining implying more people will have money to save for a home purchase. The lender is also happy that annual core inflation rate declined from 1.72% in December to just 1.62% in January. First-time home buyers should look at the opportunity of obtaining a fixed rate mortgage at a low rate now. Once inflation changes into a positive trend combined with Federal Reserve tapering, then buying a home will be even less affordable.
Please contact Peoples Home Equity loan officer today for mortgage details at: (855)-897-0300.
Giorgio U Ferrero, Peoples Home Equity, http://www.peopleshomeequity.com/index.php/main, +1 8473386062, [email protected]
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