Home affordability, is it possible?
Retirements down the drain, housing prices at rock bottom, gas prices still too high!
With headlines such as those, it is a wonder that many individuals and families think twice about being able to afford a home. This may be just the right time to change your mind.
For many young couples, the idea of owning their own home or one just like their parents is an attractive idea, but do not think it very realistic. A recent poll conducted by the Associated Press and America On Line Real Estate showed that 80 percent of respondents believed that it is hard for first-time buyers to afford a home. A majority of those polled – 59 percent – also said that they believe it is harder to buy a home now than it was five years ago.
Taking a closer look at the poll reveals that young adults and those that classify themselves as minorities consider the affordability of homes a bigger problem now than five years ago, compared to those over the age of 50 and those that identify themselves as white.
Broken down by region, almost 70 percent of those living in the western United States and almost 65 percent of those living in the Northeastern US say that it’s harder to buy now than five years ago, compared to only 54 percent of those living in the South and 51 percent of those living in the Midwest.
The poll also found that almost half of those surveyed thought that the real estate market in their home area was overpriced.
A recent report by the census bureau seems to back up the findings of the AP/AOL survey. The census report found that approximately one third of all homeowners in the US that have mortgages spent at least 30 percent of their income on housing and housing related costs. It’s widely considered excessive if your housing costs make up more than one third of your income. The census took things like mortgage payments, insurance and utilities and taxes into account.
The biggest reason for this lack of faith in new home ownership can be directly attributed to the recent housing boom over the last five years. Also, a recent increase in mortgage rates has also dampened optimism. And while incomes are up, as well, most don’t even keep up with inflation.
Another recent trend that has kept optimism for first time home buyers down is the 32 percent jump in median home value from 2000 to the end of 2005. The current median price is around $167,500.
Whatever you may be thinking, the time is right for you to buy a home. The home prices are coming down and if you don’t find the right kind of home, or the palace you want, don’t give up altogether and instead consider buying something that you can spring from later on. Mortgage rates aren’t all that high either which is another misconception. With interest rates hovering around 6% your would be crazy to think that that is a bad option. Don’t listen to the doomsayers instead invest in your first home.
If you are looking to start a business, owning your home gives you a lot of perks that you wouldn’t have as a renter and when all is said and done, the tax rebates you will benefit from will be almost the same as having another deduction on your tax return.
Don’t look back. Go ahead and research the area and find a good real estate agent and mortgage banker and take the plunge. It is well worth it.
Share your thoughts on this and let us know what you think.
If you are still unsure of what your next option is, try renting to own.
Wishing you all the very best.