In many cases there is a great deal of panic out there, which is the result of a historic inventory shortage in the housing supply. Never before have inventory levels fallen into the levels of one month supply. And in addition, the interest rates are slowly creeping back up again. They are still not at the levels they had been three years ago, but they are rising, which is increasing the cost of buying a home. This becomes especially stressful for first-time home buyers, who feel that they are chasing a never-ending market that appreciates on a month-to-month basis.
Because the number of existing homes continues to erode, there is the expectation that prices will remain at these elevated levels for the next 12 months.
One of the ways to reduce the amount of stress for home buyers is to follow these four principles:
1. Buy with the future in mind. The median duration of home ownership in the United States is 13 years, as of 2018. This translates into some family planning such as commutation factors, including total travel time and costs, quality of schools, taxes, and population density.
2. The average median age for first-time home buyers has increased by 14% since 1981. That median age has now hit 33, representing the oldest age dating back to 1981, when the National Association of Realtors began recording such data. In 1981, the median age for a first-time home buyer was between 28 and 29 years old.
3. Considering population density, will the number of new construction units be upon available buildable lots or will they be teardowns and new structures? The density of certain attractive neighborhoods most likely will increase in population. That will affect parking, travel time and also the general congestion that comes from living in a sought-after neighborhood. Greenwich, Connecticut is a classic example of overpopulation. The traffic on the Old Post Road is now as much as that in New York City.
4. Mortgage rates are slowly creeping higher, but they have a long way to travel to the traditional 5 to 6% mortgage rates homeowners had been used to pay just a few years ago. In addition, credit scores for most home buyers now exceed 700 FICO.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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