I got an email today which is not wholly unique as headlines scream a possible housing crash. Here’s what a prospect wrote me when I checked in on his house hunt…
“Thanks for checking in. I believe that we will see a decrease in housing prices of 40 to 50 percent in most markets and am currently holding off until this crash ends, which may be more then a year. Thanks.”
How do you fight that? Convince the naysayers that the housing market is stable. 40-50% decrease? WOW, I mean that’s big. Do you know how far housing dropped in 2008? 25% and that was the worst housing decline in history. Check out the equity chart below showing both home value growth (top line) and total mortgage debt (bottom line). Today we have:
3 months of inventory nationwide,
38% of all homes owned free and clear,
a 30% average loan-to-value of those homes with mortgages,
75% of mortgaged homes with interest rates at or below 4%,
an average credit score of 714,
and the largest volume of HECM/Reverse mortgages…baby boomers are aging in place.
In 2008 there were 11 months of inventory, buyers who never qualified to purchase a home buying more than one at a time, an average credit score of 690, and an average loan-to-value of 41%.
Today, homeowners have double the equity they had at the height of 2005 and only $1 trillion more in debt. Homeowners today simply need to not sell. And those sitting on the sidelines for the next year won’t pay 20% more for a home, thankfully! But, more likely, will likely pay 4-6% more AND…while they are waiting are paying down their landlord’s mortgage.
Hopefully some of these facts along with our Rent vs Buy and Cost of Waiting packets help you help them understand the opportunity cost. Need a buyer packet? We’ve got you! Or should I say Kara and Ashleigh, my amazing Marketing Duo has your back 😉
P.s. on the prospect above… I am making it my personal mission to convert him. But if there is someone that shuts you down..time to move on and keep changing lives!
Buyers Can Get TWO Down Payment Assistance Loans
Let me start with… I do not want to put anyone in over their head. We all know real estate softens in the Fall and DPA loans can put buyers under water immediately. I am not advocating stretching someone; but I am advocating helping everyone take a responsible leap into homeownership. Think about this… people are paying every month for a roof over their heads, it’s either rent, a mortgage payment, or set asides for annual taxes and insurance. Helping someone who thinks they have no options is elevating our job to advisor and champion. Buyers who are struggling to save money for a down payment, especially with inflation over 9%, have an opportunity right now given greater supply, slightly less demand, and lower rates then we saw in June.
Buyers who need more help and fall within the CHAC income limits can qualify for a chfa or MMA first and second loan then a CHAC third lien up to $25,000. Now of course there are debt to income restrictions, credit score requirements and a home buyer class they need to take. And admittedly it will be harder to do this in Denver. But we have two Colorado borrowers in our pipeline today who are successfully using both CHFA and CHAC.
As a side note, as of July 1st, all “paid” collections have dropped of credit reports, giving buyers a big boost to their credit scores! One of our clients just went from a 665 in June to a 730 in July.. BOOM!
TEN New Renovation Opportunities
I love a good deal. But admittedly, I personally have no vision. Like to a fault. I have vision for building businesses and teams but not homes. Thank God He put Peter in my life! But … if you have a client who has vision and drive, this market’s secret opportunities are buried inside renovation loan ready homes. The loan is based on future value, can roll in construction costs, and put as little as 3% down primary, 10% down second home and 15% down investment. Have investors not finding deals… here they are!
Nicole Rueth has been passionately advising clients on their wealth building and home financing strategies for over 17 years. Her path has been non-conventional and it is a benefit to her clients. www.TheRuethTeam.Com.