{"id":1864,"date":"2021-07-15T14:16:04","date_gmt":"2021-07-15T14:16:04","guid":{"rendered":"https:\/\/phphouses.com\/blog\/?p=1864"},"modified":"2021-07-15T14:16:04","modified_gmt":"2021-07-15T14:16:04","slug":"diving-deep-todays-biggest-buyer-concerns","status":"publish","type":"post","link":"https:\/\/phphouses.com\/blog\/diving-deep-todays-biggest-buyer-concerns\/","title":{"rendered":"Diving Deep into Today\u2019s Biggest Buyer Concerns"},"content":{"rendered":"
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Diving Deep into Today\u2019s Biggest Buyer Concerns<\/p><\/div>\n

Last week,\u00a0Fannie Mae<\/em>\u00a0released their\u00a0Home Purchase Sentiment Index<\/em><\/a>\u00a0(HPSI). Though the survey showed 77% of respondents believe it\u2019s a \u201cgood time to sell,\u201d it also confirms what many are sensing: an increasing number of Americans believe it\u2019s a \u201cbad time to buy\u201d a home. The percentage of those surveyed saying it\u2019s a \u201cbad time to buy\u201d hit 64%, up from 56% last month and 38% last July.<\/p>\n

The latest HPSI explains:<\/p>\n

\u201cConsumers also continued to cite high home prices as the predominant reason for their ongoing and significant divergence in sentiment toward homebuying and home-selling conditions.<\/em>\u00a0While all surveyed segments have expressed greater negativity toward homebuying over the last few months, renters who say they are planning to buy a home in the next few years have demonstrated an even steeper decline in homebuying sentiment than homeowners. It\u2019s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments.\u201d<\/em><\/p><\/blockquote>\n

Let\u2019s look closely at the market conditions that impact home affordability.<\/p>\n

A mortgage payment is determined by the price of the home and the mortgage rate on the loan used to purchase it. Lately, monthly mortgage payments have gone up for buyers for two key reasons:<\/p>\n

    \n
  1. Mortgage rates have increased from 2.65% this past January to\u00a02.9%<\/a>.<\/li>\n
  2. Home prices have increased by\u00a015.4%<\/a>\u00a0over the last 12 months.<\/li>\n<\/ol>\n

    Based on these rising factors, a home may be\u00a0less<\/em><\/strong>\u00a0affordable today, but it doesn\u2019t mean it\u2019s\u00a0not<\/em><\/strong>\u00a0affordable.<\/p>\n

    Three weeks ago,\u00a0ATTOM Data<\/em>\u00a0released their second-quarter 2021\u00a0U.S. Home Affordability Report<\/a>\u00a0which explained that the major ownership costs on the typical home as a percent of the average national wage had increased from 22.2% in the second quarter of 2020 to 25.2% in the second quarter of this year. They also went on to explain:<\/p>\n

    \u201cStill, the latest level is\u00a0within the 28 percent standard lenders prefer for how much homeowners should spend on mortgage payments, home insurance and property taxes.<\/strong>\u201d<\/em><\/p><\/blockquote>\n

    In the same report, Todd Teta, Chief Product Officer with\u00a0ATTOM<\/em>, confirms:<\/p>\n

    \u201cAverage workers across the country can still manage the major expenses of owning a home, based on lender standards<\/strong>.\u201d<\/em><\/p><\/blockquote>\n

    It\u2019s true that monthly mortgage payments are greater than they were last year (as the\u00a0ATTOM<\/em>\u00a0data shows), but they\u2019re not unaffordable when compared to the last 30 years. While payments have increased dramatically during that several-decade span, if we adjust for inflation,\u00a0today\u2019s mortgage payments are\u00a0<\/strong>10.7% lower<\/strong><\/a>\u00a0than they were in 1990.<\/strong><\/p>\n

    What\u2019s that mean for you? While you may not get the homebuying deal someone you know got last year, that doesn\u2019t mean you shouldn\u2019t still buy a home. Here are your alternatives to buying and the trade-offs you\u2019ll have with each.<\/p>\n

    Alternative 1: I\u2019ll rent instead.<\/strong><\/h4>\n

    Some may consider renting as the better option. However, the monthly cost of renting a home is skyrocketing. According to the July\u00a0National Rent Report<\/em><\/a>\u00a0from\u00a0Apartment List:<\/em><\/p>\n

    \u201c\u2026So far in 2021, rental prices have grown a staggering 9.2%<\/strong>. To put that in context, in previous years growth from January to June is usually just 2 to 3%. After this month\u2019s spike, rents have been pushed well above our expectations of where they would have been had the pandemic not disrupted the market.\u201d<\/em><\/p><\/blockquote>\n

    If you continue to rent, chances are your rent will keep increasing at a fast pace. That means you could end up spending significantly more of your income on your rental as time goes on, which could make it even harder to save for a home.<\/p>\n

    Alternative 2: I\u2019ll wait it out.<\/strong><\/h4>\n

    Others may consider waiting for another year and hoping that purchasing a home will be less expensive then. Let\u2019s look at that possibility.<\/p>\n

    We\u2019ve already established that a monthly mortgage payment is determined by the price of the home and the mortgage rate. A lower monthly payment would require one of those two elements to\u00a0decrease<\/em>\u00a0over the next year.\u00a0However, experts are forecasting the exact opposite<\/strong>:<\/p>\n