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Obstacles to Homeownership: Perceived or Real?
Yesterday, we discussed the belief Americans have in homeownership and their desire to partake in this piece of the American Dream. We also discussed some of the obstacles preventing them from attaining that goal. However, studies have shown that many of the obstacles mentioned are perceived, not real.
A recent study by Fannie Mae, What Do Consumers Know About The Mortgage Qualification Criteria?, revealed that many consumers are either unsure or misinformed regarding the minimum requirements necessary to obtain a mortgage. Let’s break down three such challenges.
Down Payment
Perceptions
Many renters have mentioned that the lack of an adequate down payment is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:
- 40% of all renters don’t know what down payment is required
- 15% think you need at least 20% down
- An additional 4% think you need at least 10% down
The Reality
There are programs offered by Fannie Mae, Freddie Mac and FHA that require as little as 3-3.5% down. VA and USDA loans offer 0% down programs. According to the National Association of Realtors, the typical down payment for a first time buyer is 6%.
Credit Score
Perceptions
Many renters have mentioned that the lack of an adequate credit score is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:
- 54% of all renters don’t know what credit score is required
- 5% think you need at least a 740 credit score
The Reality
Many mortgages are granted to purchasers with a credit score of less than 700. According to Ellie Mae, the average credit score on a closed FHA purchase is 687 and the average credit score on all loans is 722.
Back End Debt-to-Income Ratio (DTI)
Perceptions
Many renters have mentioned that they carry too much debt which is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:
- 59% of all renters don’t know what DTI is acceptable
- 25% think you need at under 25%
- 7% think you need under 39%
The Reality
Lenders like to see a back-end ratio that does not exceed 36%. Fannie Mae’s maximum total DTI ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% based on credit score and other requirements.
Bottom Line
Don’t let a lack of knowledge or misinformation keep your family from buying a home this year. Meet with a local real estate professional who can evaluate your ability to buy now!
Blog post via KCM Blog
Real Estate Shines as an Investment in 2015
A survey by The Joint Center of Housing Studies at Harvard University reveals that when a family is buying a home they consider the financial benefits of homeownership along with the social benefits. The survey mentions things like:
- Paying rent does not make sense
- Homeownership provides a good financial opportunity
- Owning a home helps you building family wealth
- Buying a home is investing in your retirement
- Home equity gives you something to borrow against
So how did homeownership match up against other investments in 2015? Here is a chart that compares its return on investment against precious metals and the stock market last year:
Bottom Line
Not only did homeownership offer all its social benefits. It also was a great investment financially.
Blog post via KCM Blog
Top Reason to List Your House For Sale Now!
If you are debating listing your house for sale this year, here is the #1 reason not to wait!
Buyer Demand Continues to Outpace the Supply of Homes For Sale
The National Association of REALTORS’ (NAR) Chief Economist, Lawrence Yun recently commented on the inventory shortage:
“While feedback from REALTORS® continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers.”
The latest Existing Home Sales Report shows that there is currently a 5.1-month supply of homes for sale. This remains lower than the 6-month supply necessary for a normal market and well below November 2014 numbers.
The chart below details the year-over-year inventory shortages experienced in 2015:
Anything less than a six-month supply is considered a “Seller’s Market”.
Bottom Line
Meet with a local real estate professional who can show you the supply conditions in your neighborhood and assist you in gaining access to the buyers who are ready, willing and able to buy now!
Blog post via KCM Blog
Resolve to Hire a Real Estate Professional in 2016 [Infographic]
![Resolve to Use a Real Estate Professional in 2016 [INFOGRAPHIC] | Keeping Current Matters](https://i0.wp.com/www.keepingcurrentmatters.com/wp-content/uploads/2015/12/5-Reasons-to-Resolve-KCM.jpg)
Blog post via KCM Blog
MRED Chicagoland Report for November, 2015
Residential real estate is experiencing its best year since the recession. Housing demand is healthy, and that is expected to continue until the end of the year. Home sales are actually set to have their best national showing since 2006. More of the same is anticipated in 2016, but inventory and affordability challenges coupled with mortgage rate increases will likely keep any sort of monster growth in check. This should be a good thing for keeping home prices from increasing too rapidly to maintain economic stability.
New Listings in Chicagoland were down 0.4 percent for detached homes but increased 0.4 percent for attached properties. Listings Under Contract increased 22.8 percent for detached homes and 17.9 percent for attached properties.
The Median Sales Price was up 8.1 percent to $200,000 for detached homes and 8.3 percent to $166,500 for attached properties. Months Supply of Inventory decreased 22.3 percent for detached units and 21.9 percent for attached units.
Unemployment rates across the nation changed little last month, which bodes well for an increase in buying activity. The national jobless rate was 5.0 percent in October, which was 0.7 percent lower than the year prior. Although housing and employment data are quite positive at this juncture, it is still certainly possible for listings and sales to be down in year-over-year comparisons. Bad weather and the mix of housing available to buyers tend to have a greater effect on trends at the end of the year than during the midsummer months.
MRED real estate professionals can log into MREDLLC.com and click on the Statistics tab to get the latest Lender Mediated and Monthly Market Indicators Reports. You can also click on the Local Market Updates choice under the Statistics tab and use our Interactive Market Analytics map for the latest local market metrics.
Any questions? Please contact MRED’s Help Desk at 630-955-2755 or help.desk@MREDLLC.com.
MRED President/CEO Rebecca Jensen Honored with WCR Chicago’s Elevate Award
Leader of MLS Giant Recognized for Her Leadership and “Breaking Glass Ceilings”
LISLE, ILLINOIS (December 17, 2015) – Midwest Real Estate Data (MRED), Chicagoland’s multiple listing service (MLS), announced that its President/Chief Executive Officer Rebecca Jensen has been awarded the Women’s Council of Realtors® (WCR) Chicago’s Elevate Award, which recognizes an individual or company that promotes and supports the advancement of women in real estate.
WCR Chicago chose to recognize Ms. Jensen for her great accomplishments in the MLS industry and the wonderful example she has set for women in real estate.
Ms. Jensen arrived at MRED on March 2, 2015. She has worked in the MLS industry since 1998, and for the eight years before MRED she was the CEO of Utah’s regional MLS, UtahRealEstate.com. She is a member of the Executive Committee for the COVE MLS group and the MLS Executive Advisory Board at Realtor.com. Ms. Jensen also serves as Secretary for the Real Estate Standards Organization (RESO) and on the Broker Public Portal (BPP) Board of Managers. Ms. Jensen is one of the Swanepoel 200 Most Powerful People in Residential Real Estate and a Utah Business Magazine Forty Under 40 Honoree. She has also been recognized as a 2015 Rising Star by HousingWire Magazine.
“It was an honor to present the Elevate Award to the President/Chief Executive Officer of MRED,” said Sarah Ware, 2016 WCR Chicago President and Broker/Owner of Ware Realty Group. “Although there are as not as many women leaders in our industry as we would like, we are making great strides to level the playing field. This also speaks to the core mission of Women’s Council of Realtors ‘advancing women as professionals and leaders in business, the industry and the communities we serve.’ Congratulations again to Rebecca”
“The Chicago Chapter of WCR has recognized the amazing ability that Rebecca has to inspire greatness in others,” said Jeff Gregory, MRED Chairman of the Board and Broker Owner of Realty Executives Success. “She is truly a leader that others want to follow. What she has done and continues to do in the real estate industry will impress and inspire others — for years to come.”
“I cannot express how honored I am to receive the Elevate Award,” said Jensen. “I have been a strong supporter of WCR throughout my professional career, and respect the organization’s strong commitment to education and the elevation of women within our industry. I am flattered to join the list of successful individuals and companies that have been the previous recipients of this prestigious honor.”
About MRED
Midwest Real Estate Data (MRED) is the real estate data aggregator and distributor providing the Chicagoland multiple listing service (MLS) to more than 40,000 brokers and appraisers and nearly 8,000 offices. MRED serves Chicago and the surrounding “collar” counties and provides property information encompassing northern Illinois, southern Wisconsin and northwest Indiana. MRED delivers over twenty products and services to its customers, complementing connectMLS™, the top-rated MLS system in the country for two years running according to the WAV Group MLS Technology Survey. MRED is the 2013 Inman News Most Innovative MLS/Real Estate Trade Association, and for five consecutive years the MRED Help Desk has been identified as one of the best small business centers in the United States and Canada by BenchmarkPortal. For more information please visit MREDLLC.com.
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