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With Home Values Surging, Is it Still Affordable to Buy Right Now?

With Home Values Surging, Is it Still Affordable to Buy Right Now?

Housing inventory is at an all-time low. Realtor.com just reported that there are 39% fewer homes for sale today than there were last year. At the same time, buyer demand remains strong. In a recent newsletter, research analyst Ivy Zelman explained:

“Although the headwind of severe supply constraints in most markets has contributed to slight moderation in seasonally-adjusted and year-over-year new pending contract growth for two consecutive months (albeit still growing strongly), the underlying strength of buyer demandparticularly for this time of year, remains apparent.”

Whenever there’s a shortage in the supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. As a result, home values are surging.

This is great news if you’re planning to sell your house. On the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. Purchasers, however, should realize that the price of a house is not as important as the monthly cost. Here’s how it breaks down.

There are several factors that influence the cost of a home. Two of the major ones are:

  1. The price of the home
  2. The mortgage rate at which a buyer can borrow the funds necessary to purchase the home

How do these factors impact affordability?

The National Association of Realtors (NAR) produces a Housing Affordability Index which takes these factors into account and determines an overall affordability score for housing. According to NAR, the index:

“…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

Their methodology states:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”

So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:With Home Values Surging, Is it Still Affordable to Buy Right Now? | MyKCMThe blue bar represents today’s affordability. We can see that homes are more affordable now than they were from:

  • 1990 to 2008
  • 2017 to 2018

Buying a home today is just a little less affordable than it was last year, but still very affordable compared to historical housing market trends.

Note: During the housing crash from 2009 to 2015, distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

Why are homes still affordable today?

The number one factor impacting today’s home buying affordability is record-low mortgage rates. There’s no doubt that prices are on the rise. However, mortgage rates have fallen dramatically. Last week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.72%. Last year at this time, the average rate was 3.68%.

If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

At this point, home purchase affordability is still in a historically good place. However, we need to watch price increases going forward. As Mark Fleming, Chief Economist at First American noted in a recent post:

“Faster nominal house price appreciation can erode, or even eliminate, the boost in affordability from lower mortgage rates, especially if household income growth doesn’t keep up.”

Help Us Make A Difference for Local Youth this Holiday Season!

Belmonte Adopt a Shelter Charity Drive 2020 logo

Belmonte Builders is Adopting a Shelter for local youth in Malta this holiday season through Captain Community Humanity Service. Show these local youth who are scared & alone that they are not forgotten this holiday season with a thoughtful donation. 

Drop Off location - Adopt A Shelter 2020Recommended items include:

CLOTHING

  • Sweatshirts
  • Sweatpants
  • Fleeces
  • Socks
  • Pajamas
  • Jackets
  • Gloves
  • Warm hats

MISCELLANEOUS ITEMS

  • Face masks
  • Puzzles
  • Headphones
  • Wii games
  • Good body wash
  • Hair products
  • Journals
  • Colored pencils
  • Nice coloring books

GIFT CARDS
(any $ amount is appreciated)

  • Walmart
  • Amazon
  • Panera Bread
  • Starbucks
  • McDonalds

Click here to download a PDF

2019 Inductees to the Belmonte Inner Circle of Realtors

Belmonte Inner Circle logo

CLIFTON PARK, NY – Belmonte Builders is proud to recognize great realtors in Saratoga County who worked closely with our team in 2019 to find their clients the perfect Belmonte home. We are also excited to announce and welcome this year’s inductees to the Inner Circle of Realtors, those who sold their first Belmonte home in 2019.

We appreciate every single one of you and recognize your invaluable contributions to our success. Thank you for being part of the Belmonte family.

Thank You to these Inner Circle Realtors for Connecting a Buyer with Belmonte Builders in 2019

 

NameCompanyHomes Sold
Ruth Ann AbrahamsonColdwell Banker1 home / inductee
Ferdinando BrunoRe/Max2 homes
Kathie CarswellKeller Williams1 home
Debra L. CartierColdwell Banker1 home / inductee
Eric DaurioCapital Realty Experts1 home / inductee
Dona Frank FedericoSotheby's1 home / inductee
Beth GrzybowskiHoward Hanna1 home
Brian HollisterHoward Hanna1 home / inductee
Laurie “L.B” MorseHoward Hanna1 home / inductee
Sheri PennartzBerkshire Hathaway1 home
Kathleen SchnitzerKeller Williams1 home / inductee
Sheila SperlingSotheby's1 home / inductee
Barb VanBurenBerkshire Hathaway Home Services1 home / inductee
Bonnie WeilerColdwell Banker1 home / inductee

 

For more information about Belmonte’s Inner Circle of Realtors and how you can partner with Belmonte to help your clients, please call (518) 371-1000.

Homes for Sale Are Rapidly Disappearing

Homes for Sale are Rapidly Disappearing Blog Header

Through all the challenges of 2020, the real estate market has done very well, and purchasers are continuing to take advantage of historically low mortgage rates. Realtor Magazine just explained:

“While winter may be typically a slow season in real estate, economists predict it isn’t likely to happen this year…Low inventories combined with high demand due to record-low mortgage rates is sending buyers to the market in a flurry.”

However, one challenge for the housing industry heading into this winter is the dwindling number of homes available for sale. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), recently said:

“There is no shortage of hopeful, potential buyers, but inventory is historically low.”

In addition, Danielle Hale, Chief Economist for realtor.com, notes:

“Fewer new sellers coming to market while a greater than usual number of buyers continue to search for a home causes inventory to continue to evaporate.”

One major indicator the industry uses to measure housing supply is the months’ supply of inventory. According to NAR:

“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.”

Historically, six months of supply is considered a normal real estate market. Going into the pandemic, inventory was already well below this mark. As the year progressed, the supply has was reduced even further. Here is a graph showing this measurement over the last year:Homes for Sale Are Rapidly Disappearing | MyKCM

What does this mean if you’re a buyer?

Be patient during your home search. It may take time to find a home you love. Once you do, be ready to move forward quickly. Get pre-approved for a mortgage, be prepared to make a competitive offer from the start, and understand how the shortage in inventory has led to more bidding wars. Calculate just how far you’re willing to go to secure a home if you truly love it.

What does this mean if you’re a seller?

Realize that, in some ways, you’re in the driver’s seat. When there’s a shortage of an item at the same time there’s a strong demand for it, the seller is in a good position to negotiate. Whether it’s the price, moving date, possible repairs, or anything else, you’ll be able to ask for more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Do not be unreasonable, but understand you probably have the upper hand.

Bottom Line

The housing market will remain strong throughout the winter and heading into the spring. Know what that means for you, whether you’re buying, selling, or doing both.

Belmonte Builders featured in 2020 Showcase of Homes

Due to COVID-19, The Showcase of Homes looks a little different this year.  Produced as a 60- minute TV special featuring 12 of the region’s top home builders and remodelers. It’s now available online where you can now watch it whenever you want (and as many times as you want) to get inspired by all the beautiful homes, learn more about each builder and see the latest trends! Belmonte Builders is proud to be a part of this televised event and to show off our newest model home at 106A Division Street, Saratoga Springs.  Check out our segment including an interview with Peter and Lindsey Belmonte.

Belmonte Builders featured in Capital Region Homes on Demand

 

Belmonte Builders is proud to be a part of the Capital Region Homes on Demand. A 30-minute program featuring 12 of the Capital Region’s top builders and remodelers, Homes on Demand gives viewers an insider’s look at who the builders are and why they love residential building as well as offering insight about new construction and remodeling. The show premiered on Saturday, September 26th in primetime on WNYT and we are excited to make it available to you here:

Top Reasons People Are Moving

Today, Americans are moving for a variety of different reasons. The current health crisis has truly re-shaped our lifestyles and our needs. Spending extra time where we currently live is enabling many families to re-evaluate what homeownership means and what they find most important in a home.

According to Zillow:

“In 2020, homes went from the place people returned to after work, school, hitting the gym or vacationing, to the place where families do all of the above. For those who now spend the majority of their hours at home, there’s a growing wish list of what they’d change about their homes, if possible.” 

With a new perspective on homeownership, here are some of the top reasons people are reconsidering where they live and making moves this year.

1. Working from Home

Remote work is becoming the new norm in 2020, and it’s continuing on longer than most initially expected. Many in the workforce today are discovering they don’t need to live close to the office anymore, and they can get more for their money if they move a little further outside the city limits. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR) notes:

“With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”

If you’ve tried to convert your guest room or your dining room into a home office with minimal success, it may be time to find a larger home. The reality is, your current house may not be optimally designed for this kind of space, making remote work and continued productivity very challenging.

2. Virtual Schooling

With school about to restart this fall, many districts are beginning the new academic year online. Education Week is tracking the reopening plans of schools across the country, and as of August 21, 21 of the 25 largest school districts are choosing remote learning as their back-to-school instructional model, affecting over 4.5 million students.

With a need for a dedicated learning space, it may be time to find a larger home to provide your children with the same kind of quiet room to focus on their schoolwork, just like you likely need for your office work.

3. A Home Gym

Staying healthy and active is a top priority for many Americans. With various levels of concern around the safety of returning to health clubs across the country, dreams of space for a home gym are growing stronger. The Home Builders Association of Greater New Orleans explains:

“For many in quarantine, a significant decrease in activity is more than a vanity issue – it’s a mental health issue.”

Having room to maintain a healthy lifestyle at home – mentally and physically – may prompt you to consider a new place to live that includes space for at-home workouts.

4. Outdoor Space

Especially for those living in an apartment or a small townhouse, this is a new priority for many as well. Zillow also notes the benefits of being able to use yard space throughout the year:

“People want more space in their next home, and one way to get it is by turning part of the backyard into a functional room, ‘an outdoor space for play as well as entertaining or cooking.’”

You may, however, not have the extra square footage today to have these designated areas – indoor or out.

Moving May Be Your Best Option

If you’re clamoring for extra space to accommodate your family’s changing needs, making a move may be your best bet, especially while you can take advantage of today’s low mortgage rates. Low rates are making homes more affordable than they have been in years. According to Black Knight:

“Buying power for those shopping for a home is up 10% year over year, with home buyers able to afford nearly $32,000 more home than they could have 1 year ago while keeping their monthly payment the same.”

It’s a great time to get more home for your money, just when you need the extra space.

Bottom Line

People are moving for a variety of different reasons today, and many families’ needs have changed throughout the year. If you’ve been trying to decide if now is the time to buy a new home, we’re here to help you build the home that fits your individual needs.

How Is Remote Work Changing Homebuyer Needs?

Working from Home

With more companies figuring out how to efficiently and effectively enable their employees to work remotely (and for longer than most of us initially expected), homeowners throughout the country are re-evaluating their needs. Do I still need to live close to my company’s office building? Do I need a larger home with more office space? Would making a move to the suburbs make more sense for my family? All of these questions are on the table for many Americans as we ride the wave of the current health crisis and consider evolving homeownership needs.

According to George RatiuSenior Economist for realtor.com:

“The ability to work remotely is expanding home shoppers’ geographic options and driving their motivation to buy, even if it means a longer commute, at least in the short term…Although it’s too early to tell what long-term impact the COVID-era of remote work will have on housing, it’s clear that the pandemic is shaping how people live and work under the same roof.” 

Working remotely is definitely changing how Americans spend their time at home, and also how they use their available square footage. Homeowners aren’t just looking for a room for a home office, either. The desire to have a home gym, an updated kitchen, and more space in general – indoor and outdoor – are all key factors motivating some buyers to change their home search parameters.

A recent realtor.com-HarrisX survey indicates:

“In a June poll of 2,000 potential home shoppers who indicated plans to make a purchase in the next year, 63% of those currently working from home stated their potential purchase was a result of their ability to work remotely, while nearly 40% [of] that number expected to purchase a home within four to six months and 13% said changes related to pandemic fueled their interest in buying a new home.

Clearly, Americans are thinking differently about homeownership today, and through a new lens. The National Association of Home Builders (NAHB) notes:

“New single-family home sales jumped in June, as housing demand was supported by low interest rates, a renewed consumer focus on the importance of housing, and rising demand in lower-density markets like suburbs and exurbs.”

Through these challenging times, you may have found your home becoming your office, your children’s classroom, your workout facility, and your family’s safe haven. This has quickly shifted what home truly means to many American families. More than ever, having a place to focus on professional productivity while many competing priorities (and distractions!) are knocking on your door is challenging homeowners to get creative, use space wisely, and ultimately find a place where all of these essential needs can realistically be met. In many cases, a new home is the best option.

In today’s real estate market, making a move while mortgage rates are hovering at historic lows may enable you to purchase more home for your money, just when you and your family need it most.

Bottom Line

If your personal and professional needs have changed and you’re ready to accommodate all of your family’s competing priorities, let’s connect today. Making a move into a larger home may be exactly what you need to set your family up for optimal long-term success.

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