How can we help first time buyers buy their home without making costs go up
Renting will become more common among lower- and middle-income families. This should raise an alarm in the industry.
Interest rates are rising.
If it happens, it will be the most major rate raise in more than two decades. It's a policy intended at lowering inflation, and it may have that effect in some areas of the economy — but the actual issue may be that the dollar has just devalued.
Home prices are at an all-time high.
Unofficially, the last two years appear to have seen the most significant increase in property values in decades, if not a generation. It's becoming increasingly clear who the "haves" and "have nots" are.
High interest rates and prices have little impact on those of us who own homes. In fact, every time a new listing is published online. Current homeowners find their "wealth" construction impressive.
For the largest group, who own the smallest share of homes, rising rates and prices are a major concern. For low-income or debt-strapped homebuyers, buying a home was previously difficult, but in less than two years, affordability is gone for many.
Renting appears to be becoming more popular among lower-income and even middle-class families. This is a concerning warning for those in this generation hoping to get out of debt or increase family wealth. This is also a red indicator for folks who make money selling single-family homes.
The increase in interest rates will effectively double the cost of a loan compared to a year ago. This must definitely reduce home demand while increasing supply, limiting the rise in house prices, right?
"Most purchasers make purchases in response to life events. Rising rates do not result in a drop in demand or an excess of inventory. The events of such people's lives are unaffected by rates. Even with increasing prices and borrowing rates, demand will continue to outstrip supply.
The housing industry requires a solution for first-time homeowners that does not flood the market with cash, driving up prices and essentially pricing out those in the waiting list. Recent cash-based solutions have had disastrous long-term consequences.
What is the answer?
How do we aid first-time homeowners without pushing up expenses, with more single-family residential transactions, house prices increasing, and interest rates doubling?
To get started, schedule a one-on-one meeting with one of our sales or mortgage consultants.