Busting the Myth About a Housing Affordability Crisis

It seems you can’t find a headline with the term “housing affordability” without the word “crisis” attached to it. That’s because some only consider the fact that residential real estate prices have continued to appreciate. However, we must realize it’s not just the price of a home that matters, but the price relative to a purchaser’s buying power.

Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by 3.5% over the last year.

Let’s look at three different reports issued recently that reveal how homes are very affordable in comparison to historic numbers, and how they have become even more affordable over the past several months.

1. National Association of Realtors’ (NAR) Housing Affordability Index:

Here is a graph showing the index going all the way back to 1990. The higher the column, the more affordable homes are:Busting the Myth About a Housing Affordability Crisis | MyKCMWe can see that homes are less affordable today (the green bar) than they were during the housing crash (the red bars). This was when distressed properties like foreclosures and short sales saturated the market and sold for massive discounts. However, homes are more affordable today than at any time from 1990 to 2008.

NAR’s report on the index also shows that the percentage of a family’s income needed for a mortgage payment (16.5%) is dramatically lower than last year and is well below the historic norm of 21.2%.Busting the Myth About a Housing Affordability Crisis | MyKCM

2. Black Knight’s Mortgage Monitor:

This report reveals that as a result of falling interest rates and slowing home price appreciation, affordability is the best it has been in 18 months. Black Knight Data & Analytics President Ben Graboske explains:

“For much of the past year and a half, affordability pressures have put a damper on home price appreciation. Indeed, the rate of annual home price growth has declined for 15 consecutive months. More recently, declining 30-year fixed interest rates have helped to ease some of those pressures, improving the affordability outlook considerably…And despite the average home price rising by more than $12K since November, today’s lower fixed interest rates have worked out to a $108 lower monthly payment…Lower rates have also increased the buying power for prospective homebuyers looking to purchase the average-priced home by the equivalent of 15%.”

3. First American’s Real House Price Index:

While affordability has increased recently, Mark Fleming, First American’s Chief Economist explains:

“If the 30-year, fixed-rate mortgage declines just a fraction more, consumer house-buying power would reach its highest level in almost 20 years.”

Fleming goes on to say that the gains in affordability are about mortgage rates and the increase in family incomes:

“Average nominal household incomes are nearly 57 percent higher today than in January 2000. Record income levels combined with mortgage rates near historic lows mean consumer house-buying power is more than 150 percent greater today than it was in January 2000.”

Bottom Line

If you’ve put off the purchase of a first home or a move-up home because of affordability concerns, you should take another look at your ability to purchase in today’s market. You may be pleasantly surprised!

Expert Insights on the Current Housing Market

The current housing landscape presents greater home values, low interest rates, and high buyer demand. All of these factors point to the strong market forecasted to continue throughout the rest of the year.

There is, however, one thing that may cause the industry to tap the brakes: an overall lack of housing inventory. Buyer demand naturally increases during the summer months, but the current supply is not keeping up.

Here is a look at what a few industry experts have to say:

Lawrence Yun, Chief Economist at National Association of Realtors

“Imbalance persists for mid-to-lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices.”

Mark Fleming, Chief Economist of First American

“Market conditions are ripe for increasing home sales with one glaring exception. The supply of homes for sale remains tight, keeping existing home sales below potential.”

Danielle Hale, Chief Economist of Realtor.com

“We’re not seeing as many new listings come up on the market…It was only 18 months ago that the number of homes for sale hit its lowest level in recorded history and sparked the fiercest competition among buyers we’ve ever seen.”

Bottom Line

If you’re thinking of selling, now may be the time. Demand for your house will be strong during a period when there is very little competition, ideally leading to a quick sale and a great return on your investment.

*credit to KeepingCurrentMatters

Why Use Beach Team!

Testimonials from clients!

Debra Hilse’s home sold well above list price thanks to Beach Team! 

“Steve Nader is one of the nicest, and most professional real estate agents we’ve ever met. He works so hard to make sure everything is taken care of in every aspect of your real estate needs. He was always there when we needed him. He will make sure you get the highest price possible for your home. He has a great team working with him as well. Both Steve and his operations assistant Suzanne go above and beyond to help you, even as far as volunteering to come and help you get ready for open house etc. You will not be disappointed. Even though we gave Steve Nader a hard time most of the time and joked around with him he always had a good attitude. Steve and Suzanne are both great people and fun to work with,  we are going to miss them both.”

Cynthia Cerda gave Beach Team a 5 star review after we helped her purchase a Condo home in 2019 in Lakewood Village, Long Beach, CA. Here’s what she said:

“I started my home search a year ago, randomly met Steve when I posed interest in a condo in which he was the listing agent. He was very charismatic but genuine and knew what he was talking about. He invited me to come into the office to meet with him and the lender. I stopped looking for a while  and started up the process again in January 2019. I consider myself picky considering I had a few restraints but Steve was very patient with me and found me the perfect condo in Lakewood Villave. I highly recommend Steve!”

Moses bought a Single Family home in 2019 in Zaferia, Long Beach, CA. Here’s what Moses said about Steve and Beach Team! 

“My fiancee and I found Steve while searching Long Beach properties on Zillow. He showed us two properties, but we already knew the one  that we wanted. He referred us to a great mortgage broker and escrow company, as well as an excellent local home inspector who was as thorough as one can be. We  had a few hiccups with our own personal situation, and Steve managed to keep the ball rolling with escrow extensions, etc. We’re finally in our new home, couldn’t be happier, and couldn’t have done it without Steve. Look no further, Steve’s your guy.”

Christina O gave another 5 star review after we helped her find the perfect 3 bed/ 2 bath home in Long Beach!

“We had a realtor we worked with for many years in the past but we chose to work with Steve when we decided to buy in Long Beach because we weren’t very familiar with the Long Beach area and couldn’t really figure out which specific areas of Long Beach were going to be good for us. We met Steve at an open house and chose to work with him even though we didn’t know him at all because he seemed to be very knowledgeable about the area and was really good at catching what we were looking for. We also felt like he was smart and competent. Steve educated us on all the different neighborhoods in Long Beach and we drove around to get a vibe of the different areas. We were able to make a decision to make an offer on a house right away and Steve did not disappoint in being a competent realtor. What we appreciated about Steve the most is his responsiveness and the way he explained every process. He was always available and thoroughly answered all our questions. He also connected us to an airbnb rental owned by his friend because the timing of our moving out of our old place and moving in to the new place didn’t line up. It was a pleasant stay. One thing I would have appreciated more is if Steve was more open about giving advice and sharing his honest perspective during counter offering process. I do understand that he was being cautious.

All in all, it was a pleasure to work with Steve and his team and I would recommend him to anyone looking to buy in Long Beach!”

Aric Lewis gave another 5 star review after his purchase of a Single Family home in 2019 in California Heights, Long Beach, CA.

“Steve Nader is everything you want in an agent. Hard working, straightforward and a great negotiator.He made the stressful process go smoothly for us and we are happy with our new home.”

Christina Sandler gave a 5 star review after we helped her buy a Single Family home in 2019 in Belmont Heights, Long Beach, CA.

“We had been looking for a new home for almost 2 years before working with Steve.  He helped us find our first home in just a few months. (And not just any house!) The house that checked off everything on our list, was exactly what we wanted, and was a very competitive listing.  (We had put in offers before, but were never even in the running in this competitive market.) Thank you, Steve, for your hard work and expert guidance! Being a first-time home buyer can be a little scary, and stressful, but we knew we were in good hands with the beach team on our side.  We couldn’t be happier! Thank you, again!”

Beach Team delivers you outstanding services with an elevated experience! Call us today!

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Closing Costs Explained

Wondering where your money goes when Closing Escrow? Check out this diagram that explains where your money goes starting with Title Fees to commission fees to Loan pay off fees! Don’t purchase a home without understanding the true costs of buying a home and the money processing order. Call Us today with any questions!

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Attention First-Time Home Buyers!

Attention First time home buyers! Don’t stress about the unknown… HIRE AN AGENT!! Aside from hiring a real estate professional to guide you through your first home purchase, here are some tips to make it a smoother, less stressful experience.

1. Hiring an agent is important but hiring the RIGHT agent for you is even more important. Find a professional who will have your best interest in mind and knows the local area and market well. This will guarantee you the quality services and guidance you need.

2. Buy within your budget. Calculate how much percentage of your monthly income you are willing to put towards your mortgage. Come to a price on your own to give you a good idea of where you may be financially. Next, get pre-approved from a lender to finalize your ideal budget for your future home. Going over budget will only limit your potential renovation plans or design aspirations. Know your budget prior to beginning your search!

3. Inspect your home! Don’t fall into the trap and go the cheap route of skipping an inspection on your home. People who pass on inspections end up paying more to fix problems that previous owners would have been financially responsible for had you gotten inspected. You may want to renegotiate the price of a home based on the inspection results and could save you money!

Things to remember when searching for your first home
1. Paint is cheap!! Don’t let paint color deter you from a home, it is an easy fix!
2. Appliances are easily replaced. Compared to a home price, appliances are cheap so don’t base your home off of luxuries, those can be purchased later.
3. Popcorn ceilings are an easy fix also!
4. Wood floor finishes can easily be altered.
5. Look past the lighting or fixtures, that’s a simple, quick fix!

Of course everyone has their own image of their ideal home but we suggest you make a reasonable list of must haves and know that several deterrents in homes are usually easily fixable or changed. Keep this in mind when searching for your first home. House hunting is fun!

Moving Sucks!! Read how to ease the process here

Poor organization

            Stay organized with your packing. LABEL LABEL LABEL! Label all boxes, bags, containers so you can easily position the boxes in your new home to be unloading. The biggest time consumer is figuring out which box has which items. Take the time to measure your furniture being transferred to the new home as well as the entry ways into the new home to guarantee it will fit. If it will not fit it is better to know ahead of time so you can arrange for a proper moving company to help transfer the furniture professionally.

Paperwork is one of the most difficult things to transport when moving homes but only if you are unorganized. Keep files LABELED of everything you own. Put those files into a bigger box that will hold all paperwork together. Keeping paperwork organized can be stressful but you will thank yourself later if you organize PRIOR to move in day.

Create a moving budget weeks before you move that includes costs of moving companies and extra services you may need prior to staying at your new home. Planning too late will result in higher fees as well as unnecessary stress trying to find available companies. Those who do not make a moving budget more often than not end up over spending simply due to lack of planning and organization.

Relocation can be a very stressful process so planning ahead and remaining organized through the process before and during is the key to a smoother process.

 Traffic Problems

            A common struggle when moving from one location to another is the process of unloading and carrying furniture, boxes etc. from the car into your new home. Finding a parking spot right in front of your homes will make the process easier as well as the load lighter because you will not have to carry it as far. We suggest coning off spots the morning of your move in day to eliminate the extra walking, carrying and stress on your body.

 Misleading Movers

There are hundreds of moving companies out there. Make sure to do extensive research on movers to get a well estimated price that is suitable for your situation. The best suggestion is to use a company a friend or family member can refer to you so you know they are reliable and trustworthy. Purchasing appropriate insurance for your belongings may be a good idea to do as well prior to moving date.

PLAN PLAN PLAN! Stay on top of all expenses, dates and appointments when planning to move. Make the process as stress free as possible to make moving exciting rather than stressful!

Be Prepared and Stay Safe!

Being prepared for a disaster, whether a severe storm, power failure in the winter, flood, large urban fire, earthquake, or large chemical spill, we have responsibility to be prepared. Emergencies can occur at any time and without warning. Living in Southern California, as we have seen recently, earthquakes unfortunately take place so take the initiative to get your home and family ready for any future earthquakes or natural disasters! First, get your home re-inspected to ensure it is up to the new earthquake safety standards! Consider installing earthquake straps or bolts to help hold shelving, wall units or water heaters to the walls in case of emergencies. Aside from home safety, your family’s and your personal safety are also important! Safety kits can be purchased in stores all over including Amazon or grab a bag and make your own kit! Here are some tips and tricks to easily and inexpensively prepare an emergency bag.

DIY earthquake kit essentials:
•  Earthquake water! It stays good longer than your typical bottled water.
•  First aid kit
• Non-perishable foods
• Medication
• Batteries
• Flashlight
• Sanitation and personal hygiene items
• Multi-purpose tool
• Copies of personal important documents
• Family and emergency contact information.
• Cash
• Paper maps
• Emergency blanket

Following an Earthquake here are some things you should do:
• Stay calm and prepare for aftershocks.
• Check for injuries and administer first aid to your best ability.
• Check for obvious hazards or dangers to your home.
• Do not turn off or on any lighting or electrical device.
• Use emergency supplies only if necessary.

The better prepared, the better you can minimize upset and anxiety that often occurs during an emergency! Find more safety tips to consider before, during and after an earthquake below.

Earthquake Safety

WANTS vs NEEDS

Before you begin your dream home search, understanding the difference between your WANTS and your NEEDS is an important first step! As you start previewing properties, you will likely have a dream list of ideas that you desire in your new home but the key is to identify whether those features are imperative. While it’s normal to fantasize about high tec., luxary amenities, we recommend you remain open minded when searching for your new home to assure we find the best home fit for you. Maybe your dream kitchen could be a possible future renovation plan which would allow you to acquire a perfect home fitting your current needs and setting aside your wants for the future.

The first step in the process is getting pre-approved so you are well aware of your budget and what you can and should be looking for as well as which location would be priced right for you. To keep your WANTS vs NEEDS in order, begin your process by first making a list to start realistic when searching for your home.

“Must-Haves” – if this property does not have these items, then it shouldn’t even be considered (ex: distance from work or family, number of bedrooms/bathrooms).

“Should-Haves” – if the property hits all of the ‘must-haves’ and some of the ‘should-haves,’ it stays in contention but does not need to have all of these features.

“Absolute-Wish List” – if we find a property in our budget that has all of the ‘must-haves,’ most of the ‘should-haves,’ and ANY of these, it’s the winner!
-KeepingCurrentMatters

Remember to decipher between the necessities of your potential new home and those luxuries you can live without well before you begin your home search. This will ensure staying on budget and finding the perfect home for you within a short time period!