Buying a house is a huge investment. It’s something that shouldn’t be done on a whim because it requires a lot of considerations. While almost everyone wants to have their own home, there are aspects to life that preclude one’s ability to purchase a property. It’s important for you to assess your life situation before deciding whether it’s the right time to buy your own real estate in Medina. Continue reading…
The successful sale of your Maple Grove, MN home may depend on its marketing. Because of fierce competition in the real estate market, you need to give potential buyers enough reasons to choose your property. Though listings serve an integral role in the selling process, your marketing technique is what ultimately attracts potential buyers. Continue reading…
Location is an integral factor in buying any type of home. Before you check the features, you should seriously consider the area in which you will be living, as it could make or break your buying decision. However, location isn’t the only crucial factor you should look into when buying luxury homes. Since you will be spending more on this type of home, you have to ensure that the property is worth every penny. Continue reading…
Selling a Lake Minnetonka house can be quite a challenge. Since the competition in the real estate market can be tough, you have to prepare your property to make it more appealing to buyers. Minor touch-ups can do wonders, but the most important thing to do is highlight the best features of the property and fix whatever issues it may have. You may also want to put yourself in the buyer’s shoes to figure out the enhancements you can do to boost the value of your home. This way, you can hook buyers’ attention easier. Continue reading…
As a student, you may have a lot of educational loans to pay off. These loans can get in the way of purchasing a home, a dream you may have had for many years now. Keep this dream alive and deal with your student debt appropriately by taking the following proactive measures. Continue reading…
If you have extensive knowledge of renovation and real estate, flipping houses for a living may be a lucrative venture to consider. This process involves a lot of decision-making, and one wrong move could be financially disastrous. Make sure you are ready for this long-term endeavor by consulting with a real estate professional. They can help in many ways. Continue reading…
While many people dream of buying their own homes, not having a lot of money on hand can sometimes make that difficult. Fortunately, there are ways to find a home that’s within your budget and fits your lifestyle to perfection. There are even government programs that can help. Consider the following steps to make home buying on a budget a little easier. Continue reading…
Around 35% of people looking for homes fall into the first-time category. The pursuit of a new home foments both excitement and stress, but for good reason. Obviously, you have never committed to such a large financial investment in your life. Though you may not be a real estate expert, you can take the critical steps required to choose a home that’s perfect for you and priced appropriately. Continue reading…
In recent Lake Minnetonka economic news, it appears home buyers and home sellers are entering the coming spring selling season with a feeling of optimism. Despite interest rates moving slightly upward and home prices continuing to rise, housing sentiment is increasing as well.
Fannie Mae publishes an index each month that ranks buyers’ sentiment. The most recent report showed buyers’ sentiment about the spring real estate sales season has risen to the highest level in six years, in part, due to a strong showing by millennial purchasers.
The millennials segment of the home buying population mentioned solid increases in employment confidence and income gains, which go hand-in-hand for first-time home purchasers – creating increased demand in the housing market. And while millennials are finally making the move out of mom and dad’s basement or spare bedroom faster than ever, the majority are still destined to rent, according to Fannie Mae’s research and statistics. As the supply of affordable inventory in the housing market continues to plague many millennials, so too does the higher price appreciation. Simply put, most millennials still find it challenging to afford to purchase their first home.
However, an ever-increasing number of millennials are entering the housing market and that’s making Lake Minnetonka economic news. The same millennials that had put off marriage and having families are slowly turning their thoughts to home ownership. Recent research shows roughly 50% of millennial families have at least one child. That represents an increase of nearly 5% from last year and 7% two years ago. Real estate experts say children in the family is the most common reason young couples buy their first homes. With the U.S. home ownership rate at what has been near an all-time low, that’s good news for millennials and good for the housing economy. In addition, when it comes to living in urban areas, the number of millennials desiring to live the urban lifestyle is decreasing – by more than 6% in just two years. They are opting for the suburbs for the spacious outdoor amenities like playgrounds and parks.
The Fannie Mae buyers’ sentiment survey also revealed 85% of millennial buyers felt their home purchase was a “good financial investment.” And why wouldn't they? They’ve seen the prices of homes rise consistently in many of the popular neighborhoods throughout the country and they’re familiar with the average cost of a home – many have watched homes in their price range continue to rise faster than their income. Despite the higher prices, the fact that millennials see their home as a good investment should fare well for increased demand as they and other millennials begin raising bigger families and buy larger and newer houses as their families grow.
Experts say the Lake Minnetonka economic news would include even greater demand for housing were it not for home values that continue to rise as a result of lower inventories nationwide – especially starter homes, popular with first-time home buyers. According to CoreLogic, nationwide home values increased 6.9% in 2016 compared to 2015. While home prices grew at a faster pace than incomes, the result was lower during the month of December 2016. Analysts cite a rise in mortgage interest rates immediately after the presidential election as possibly having an affect on asking prices by eager home sellers.
A CoreLogic spokesperson said, “Home prices continue to climb across the nation, and the spring home buying season is shaping up to be one of the strongest in recent memory.” He further added, “A potent mix of progressive economic recovery, demographics, tight housing stocks and continued low mortgage rates are expected to support this robust market outlook for the foreseeable future.”
According to the Fannie Mae sentiment report which measures consumer confidence regarding the housing market, the biggest gain in confidence was among those respondents who felt now is a good time to purchase a home. In addition, home sellers also felt it was a good time to sell. With more Americans feeling better about their employment and job opportunities, fewer are worried about losing their jobs. Other statistics in the survey showed more households are reporting slightly higher incomes – and the number of people surveyed expecting home prices to continue to rise did indeed increase. Lastly, among respondents asked about expectations that mortgage interest rates would drop, the survey percentages remained largely unchanged for the third consecutive month. This signals to researchers and real estate professionals alike that demand is high in the housing market, prospective purchasers are fairly bullish on home values and, so far, are not thwarted by what could possibly be continued slight increases in mortgage rates.
All in all, it appears that the biggest story in the Lake Minnetonka economic news is that the housing market could see a relatively strong spring selling season. Prices will be as high as they’ve been for the past several months, but qualified purchasers will be fueled by steady incomes and job security for the most part – and, while interest rates are worth watching, most analysts feel they won’t be a deterrent for purchasers anxious to trade up.
You can find more articles pertaining to Lake Minnetonka economic news in the "Economy" section of articles just below Lake Minnetonka Real Estate Categories in the column to your right. Remember to also check us out by finding us on Facebook and Twitter.
Recent trends have seen Lake Minnetonka real estate interest rates rise slightly over the past couple of months. While prospective home buyers may feel disillusioned by rising rates, let's take a look at what it may mean for them and the possibility of becoming homeowners.
As mortgage rates increase, naturally, the amount of home you can purchase decreases. In other words, the higher the interest rate, the higher the payment — and perhaps the lower the mortgage amount must be to be affordable. Borrowers need not be completely dismayed however, as there is flexibility among mortgage lenders and their qualification guidelines. Let's take a short revisit of the rate fluctuations since the presidential elections of this past November and review how interest rates have affected home affordability. How will recent Lake Minnetonka real estate trends affect the housing market?
A Recap of Lake Minnetonka Real Estate Interest Rates and the Outlook for the Future
Between the election on November 8 and Christmas of 2016, Lake Minnetonka real estate interest rates went up .75%. The rate increase was fueled in part by the feeling on the part of the American public that the new administration would enact policies of infrastructure spending, tax cuts, and a certain amount of deregulation that, once enacted, would be inflationary. In addition the skyrocketing gains in the stock market pushed the bond yields downward, and since mortgage rates are very closely tied to the US Treasury bond rates, mortgage rates had nowhere to go but up.
Most savvy economists felt when interest rates rose, they would also level off in time. And, while that is happening, it is still volatile at best. Interest rates go up and down literally daily in response to investors reacting to policies of the new administration. When investors exhibit concern that post-election inflation will continue to occur, the rates go higher. Conversely, when investors feel inflation will be softened by certain policies, delays in action, or hindrances, rates will come down.
The bottom line for interest rates is the post-election peak seems to be over, and the net result is an interest rate increase of roughly .5% since the election.
Experts predict continued rate volatility as stock market investors and the Federal Reserve work to gauge interest rate movement as part of the new government administration. Here's how that volatility is expected to impact housing activity.
The Effect of Lake Minnetonka Real Estate Interest Rates on Home Affordability
According to experts, a $350,000 home purchase on which a prospective borrower plans to put down 20%, a rate increase of .5% reduces the affordability by roughly $17,000.
While such a decrease in affordability may tend to make a prospective homebuyer look for a lower-priced home, there are other alternatives — especially if you're familiar with how most mortgage lenders operate.
For decades, mortgage lenders have used a debt-to-income (DTI) ratio in their qualification guidelines. A DTI compares the relationship of your total monthly recurring debt to your gross monthly income. Mortgage lenders typically like to see a DTI of 43% or less.
Borrowers earning, say, $65,000 annually with monthly obligations such as an auto loan and credit card bills totaling $615 per month may have qualified for the $350,000 home mentioned above. However, at a slightly higher interest rate of .5% more, they may not. Here’s why: At the income and debt totals currently, the DTI ratio was less than 43%. With the rate increase, it’s climbed to over 44%. At first glance, the only solution is to work to reduce the purchase price down to $333,000 (the original $350,000 less the $17,000 by which the affordability was reduced.) That would reduce your DTI back to a level less than 43%. However, let’s consider an alternative.
Increasing Home Affordability
Rather than trying to get the price reduced by $17,000, most experts recommend lowering your other recurring debt. As an example, a monthly credit card payment of $125 with a remaining balance of $3,125 can be reduced to roughly $45 per month by paying down the balance by just $2,000. Honestly, that may be a much easier solution and a much softer sell than trying to get the seller to come down $17,000.
Analyzing Lake Minnetonka Real Estate Interest Rates and Trends to Make the Best Decisions
It’s important to keep an eye on interest rates and other changes in the marketplace. Remember, in much the same way that the old adage, “All real estate is local,” all mortgage lending is individual. What that means is every situation is different and everyone’s DTI is comprised of components that may be changed slightly to improve the qualification percentage. Don’t make the erroneous assumption that rising rates will always reduce the price a borrower may qualify for.
See more articles pertaining to the latest Lake Minnetonka real estate interest rates and trends in the section of articles on Lake Minnetonka Real Estate just below Lake Minnetonka Real Estate Categories in the column to your right. And remember, we also post tips daily on Facebook and Twitter. Check us out there as well.