2015 Home Buying Trends

Home-Buying Trend #1: Low Down Payments Are Back

That Was Then … In the last few years, most borrowers had to put at least 20% down, since mortgage lenders, still reeling from the subprime crisis, were under government pressure to tighten restrictions.

This Is Now … Lenders are now more willing to say yes to single-digit down payments. Case in point: Fannie Mae and Freddie Mac, the government-sponsored mortgage giants, recently publicized the introduction of a new lending option for first-time homeowners that allows them to put down as little as 3%

Home-Buying Trend #2: You’re No Longer Shut Out for Less-Than-Perfect Credit

That Was Then … Without stellar credit, getting a loan was nearly impossible. In fact, in 2011, former Fed Chair Ben Bernanke remarked that the bottom third of people who might have qualified for a prime mortgage prior to the crisis could no longer get one, based on their FICO score.

This Is Now … Lenders are loosening their standards in an effort to boost home ownership across the country. By some estimates, major lenders are lowering their credit score requirements for FHA loans by as much as 60 points, while a November report by Ellie Mae found that about one third of closed loans were given to borrowers with a FICO score below 700.

Home-Buying Trend #3: You Can Stop Succumbing to Seller Pressure

That Was Then … 2012 marked the beginning of the housing recovery, when inventory became tighter and home prices finally began to rebound from the recession. As such, home buyers found themselves caught up again in tooth-and-nail bidding wars—and rarely winning.

This Is Now … Home prices are still ever-so-slightly on the uptick, but at more of a snail’s pace. According to an S&P/Case-Shiller report, housing price gains slowed for nine straight months through September.

And since more available homes are expected to come on the market in 2015, it should create a better—and less frantic—environment for buyers

Home-Buying Trend #4: You Can Compete With All-Cash Buyers

That Was Then … Speaking of competition, regardless of how creditworthy you were just a few years ago, you couldn’t stop all-cash deal makers from swooping in and sweeping sellers off their feet. In fact, as early as the first quarter of 2014, all-cash deals reached a record high, making up more than 42% of all residential sales.

This Is Now … A lot can change in the matter of a few months: By late summer, the number of all-cash real estate deals had fallen to less than 38% of home sales, and the number of purchases made by institutional real estate investors—who mostly buy with all cash—had also cooled to its lowest levels since the first quarter of 2012.

Home-Buying Trend #5: Buy for the Love of the Home—Not the Return

That Was Then … For generations, home buying was typically viewed as the smartest investment you’d ever make because you’d never lose money. And for more than three decades until 2004, median home prices rose, on average, more than 6% a year, and never declined during that period.

This Is Now … To say the housing bubble shook up the country’s beliefs about homes as a safe investment haven is an understatement. Homeowners saw their property values drop by 30% between 2007 and 2009—which may be why 43% of Americans polled in a recent survey say they no longer view property as one of the best ways to build wealth.

 

 

-Forbes

Article recorded on 1/02/2015

 

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