Entry-level homebuyers or first-time homebuyers are considered by many experts to be an integral indicator in knowing the recent trend in the housing market. With the entire real estate and the housing market in a downward progression over the past years, we can say that entry-level homebuyers’ sentiment isn’t that good either. A lot of these first-time homebuyers are very conservative with the current housing market conditions.
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There are also struggles entry-level homebuyers are facing, and John McManus wrote about this in his article published in Builder Online. Read the article below to know more.
The Real Data on Entry-Level Home Buying Affordability
Photo Credits: Adobe Stock/Stuart Miles
It’s not only what you look at in monthly payment calculations vs. household income trends–it’s what time period you pick to study the relationship.
Type the term “affordable housing” into Google and 87.6 million or more results will come up in the search.
A day doesn’t go by that we don’t see, hear, talk about affordability, or the lack of it, when it comes to housing rents, prices, trends, etc. Especially at a moment where economic, regulatory, tax, capital flow, demographic, and cultural shifts are playing out, looking ahead at whether this year’s bets on residential real estate investment will pay off as expected or not is cause for high anxiety.
The National Association of Home Builders observes that in 2017, its measures of home purchase affordability ran flat with the prior year, meaning that slightly fewer than six in 10 home sales–new and existing–were affordable to households earning the nation’s median income of $68,000.
Those measures precede, however, the real effects that rising interest rates, lost tax benefits, and higher prices due to global trade dislocation and other factors can have on monthly payments.
What’s more, although household incomes have been rumored to be gaining momentum, what’s going into people’s paycheck hasn’t reflected much of a boost compared with spiraling house prices.
Zelman analysts acknowledge genuine and material widening in the gap that separates recent trends in monthly payment calculations and household income growth, and they also note that mortgage financing costs are still rising, which might further expand that gap.
However, when it comes to conjecture on what factors may wind up influencing entry-level buyer behavior and trends in the months ahead, the Zelman take adds a critical filter of rigor to the data and what it’s measuring. See full post here…
It is currently the actual cost of the house that makes entry-level homebuyers more conservative. Also, housing affordability has declined, which means average income earners currently can’t afford to buy a house during these times. Other options such as rent prices trend also increasing.
Last year was also a bad year for first-time homebuyers. Jen A. Miller wrote about this story in her article at The New York Times. There are several underlying reasons why it happens. Read the article below to learn more.
Tax law changes, low inventory and tight credit may present extra hurdles this year for people buying their first homes.
Taking the step to buy your first home may feel like a leap — across a canyon. You will probably be spending more money at once than you have ever spent in your life, and committing to spend even more money that you don’t have, all while becoming responsible for something that won’t necessarily love you back.
To make matters worse, 2018 presents a new set of problems for rookie home buyers: a new tax law whose full effects have yet to be felt on homeowner taxes or property values; record low inventory; tough credit; and rising mortgage rates.
So should you make that leap?
What Will the New Tax Law Do to Home Values?
How the new Republican tax plan approved late last year will affect housing isn’t completely clear yet, but buying a home in 2018 will likely become more expensive, especially for buyers who live in high-tax states. Taxpayers used to be able to deduct all of their state and local taxes, including property taxes, state income taxes and city income taxes, from their federal taxes. Now those deductions are capped at $10,000 — and at $5,000 for married taxpayers filing separately.
In New Jersey, for example, the average 2017 property tax bill was $8,690 across the state, according to the New Jersey Department of Community Affairs, and more than $11,000 in counties that make up the suburbs of New York City. Those homeowners are likely to blow past the new deduction cap before they’re even done with their property taxes.
At the same time, the standard deduction has been raised to $12,000 for single filers and married people filing separately, $18,000 for a head of household and $24,000 for married couples filing jointly. So in 2018, it may make more sense for taxpayers to take the standard deduction instead of itemizing and taking the state and local tax deduction.
For taxpayers who decide to continue itemizing instead of taking the higher standard deduction, the cap on how much of those taxes can be deducted will no doubt hurt, said Sheila Brandenberg, a C.P.A. who serves on the personal finance planning committee for the New York State Society of C.P.A.s. “For most of my clients, those two numbers were over $10,000 when you added them together. They’re losing that benefit,” she said. Read the entire article here…
Among the reasons why the housing market was terrible for first-time homebuyers is tax law changes, low inventory as well as tight credits which also added to the difficulty of buying a house for entry-level buyers as well as average income earners. 2018 was true, a bad year for entry-level homebuyers.
We know for a fact that last year was not the year for first-time homebuyers, it’s time to find out if this year’s trend favors entry levels. Brenda Richardson wrote at Forbes.com about some cheat sheet for first time home buyers in today’s housing market.
A Cheat Sheet For First-Time Home Buyers In Today’s Tight Market
Image Source: Forbes
In today’s housing market where affordable single-family homes are difficult to come by, potential first-time buyers have been forced to make compromises in how they shop for a home and what’s on their wish list to make their homeownership dreams a reality.
The 2019 NerdWallet Home Buyer Report finds that 36% of Americans plan to buy a home in the next five years. Of them, 24% say they’ll be making the purchase within the next 12 months.
The report examines the compromises and ways first-time buyers could save money. Here are some key findings from the report based on a new online survey conducted by The Harris Poll in January.
Upping the ante. Nearly half (45%) of Americans who have purchased a home in the last five years offered more than the asking price before having their offers accepted. NerdWallet home expert Holden Lewis attributes this to stiff competition in a sellers market.
“When we looked at the people who bought homes in the last five years, people who were first timers and the people who were repeat buyers, we found that first-time home buyers made more offers before finally having one accepted,” said Lewis. “For all buyers, the average was three offers before an offer was finally accepted, and that might be for one house or they made offers for more than one. But for first timers, they made nearly four offers before having one accepted.”
First-time home buyers are likely to be younger and on a leaner budget. Those with less to spend stand to feel squeezed more.
“They might be low-balling in their first offer in a market in which that is not really the way to do it,” said Lewis. “I think a bigger part does not have that much to do with inexperience. When you’re buying an entry-level home, it’s tougher. There are more buyers, there’s more competition, and therefore, you’re going to have to make more offers on average.” Click here to read the rest of this post…
Despite being in a housing market not favoring entry-level home buyers, they can still find their way in this tight market. Experts also found out that first-time homebuyers made more offers before finally having one accepted. Also, they are likely to be much younger and have a tighter budget.
First-time homebuyers still have the option to own a house despite their lean budget. Some are selling their house fast and at a discount for various reasons. If you are one of those who see this as an opportunity to earn money by selling your property, Dependable Homebuyers can help you find the right buyer for your property.
There are a lot of first-time homebuyers in the market, and we can find the right buyer for you. To get started, visit https://www.dependablehomebuyers.com/sell-your-house/ and we look forward to hearing from you.
