In June, the number of first-time homebuyers accounted for 35% of the existing homes sold, a trend that’s been building steadily throughout the year. The major factor is low mortgage rates.
In a recent Insights Blog, CoreLogic reported that rent prices have skyrocketed since 2005. Meanwhile, the typical mortgage payment has actually decreased.
Why the difference between the costs of renting versus owning?
It makes sense that rents have risen. However, how did mortgage payments decrease? CoreLogic explained:
“It’s mainly because mortgage rates back in December 2005 were significantly higher, averaging 6.3% for a fixed-rate 30-year loan, compared with 4.6% in December 2018.
The national median sale price in December 2005 – $190,000 – was lower than the $220,305 median in December 2018, but because of higher mortgage rates in 2005 the typical monthly mortgage payment was slightly higher back then – $941 – compared with $904 in December 2018.”
Additionally, a recent report by the National Association of Realtors (NAR) showed that purchasing a home requires less of your monthly paycheck.
According to the Economists’ Outlook Blog, NAR’s February 2019 Housing Affordability Index showed that the “percentage of income needed” to pay the typical mortgage has decreased the last three months.
November – 17.3%
December – 16.9%
January – 16.2%
February – 15.9%
With the average mortgage payment now estimated at a lower monthly cost than renting, it’s a great time for first-time homebuyers to enter the market. If you’re among the first-time homebuyers who are unfamiliar with the process, you’re not alone. If you’re not sure where to begin or you simply want help in figuring out how to save for a home, finding a trusted real estate agent to work with is a critical step toward your success.
A real estate professional can help you understand the process, review your current situation, and guide you with a plan to help you to feel confident when buying a home.
If you’re interested in purchasing a home and need help getting started, contact the Diane McConaghy Team at RE/MAX Select Realty today so you can take advantage of the support available to guide you through each step of the way.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice.