Despite Covid-19 and the panic that has ensued in the mortgage and real estate markets (in April, 2020 1.6 million people stopped paying their mortgage - for a total of 3.6 million non-mortgage-paying Americans YTD 2020 though April), home prices are going up. Home prices are going up for a number of reasons (my past blogs spoke to this): First, we're taxing (through tariffs) just about everything coming into the USA. This is particularly evident in homes. Building a new home now can cost as much as 100% more than it did just ten years ago (average cost to build a new home is just under $300k according to Homeadvisor.com, November 5, 2019 blog, before land costs). Ten years ago the cost per square foot of a home was $80. By 2015 the cost per square foot was $103. And today the national average is $163 a square foot. In the south, this cost is $130 a sq ft and in the northeast it's $180 a sq ft. This is according to the NAHB. We will see the average cost per square foot exceed $300 in the next 5-10 years (according to me).
This is another way to tax Americans, by raising costs through tariffs - which is good for America. We're all for that. It's just that purchasing a new home appears to be riddled with added costs, compared to purchasing an existing home (not to mention you get to negotiate with an Average American when you purchase an existing home - rather than the builders, which are usually experts in their field at buying low and selling high).
My family has built a few homes here in North Carolina (we've lived here off and on, since 1985), and the costs are lower here than most states; that translates into existing homes costing a lot less too. According to the US Census Bureau HUD data May 19, 2020, new residential construction has fallen by 30% (from 1.5M seasonally adjusted permits for new homes to 900K from 2015- 2020). With uncertainty, comes a reduction in human risk-taking. Fewer people will build new homes than the 900k that are still building (we saw a trough of 600k new home starts in the last recession of 2009). What this means, is simple. Less supply. Much less supply as Millenials won't want to move as often as they have been.
In fact Millennials and Gen Z's can afford a $510,400 Fannie Mae 30 year fixed mortgage on as little as $75k in income (sometimes even less). Remember, the average starting salary of a new college graduate is over $50k now. Millennials and Gen Z's move a lot more than Boomers. The average Millennial moves every two years, according to HousingWire. With Covid-19 this is going to change. Millennials have gravitated toward inner city urban living and the wonderful experiences such cities provided. Now, with a horizon of 12 months or more for Covid-19 exposures, it appears those benefits have turned into risks. The risk of infection through shared common spaces (elevators, bathrooms, lobbies, air-vents, public transpo, restaurants geared to packing in diners, etc.) will lead many Millennials to consider what Baby Boomers have already known, more space for less money and a one to five minute drive is worth the value. Hanging out on the back porch with a wood-fire in an urban forest of fresh air is relaxing and excellent for the human spirit and a healthy mind. Millennials will seek bike trails and exercise, no doubt - but maybe not an expensive HOA that incorporates a healthclub into the living space (for that price they can dedicate 1,000 sq ft to the home gym, like Boomers).
Just in my life, we've had our family back in our home. It's been wonderful for all, as we live in a larger home. Why sell? No reason. Why is the family back? The answer is simple. Higher risk in smaller spaces. Millennials will be looking for larger homes with fewer risks of infection, and that too is increasing the cost of housing (price wars are still prevalent in the Triangle). That cute condo (with shared walls, ventilation, etc.) doesn't look so cute compared to the 5,000 sq ft home selling for under $600k just a mile from the condo. Cool is starting to look risky. BBQs, fireplaces, home gyms, lots of space, and bike trails/running trails - are the future. And the Millennials that flocked to the beaches saying this was a hoax, despite the data? Those are probably part of the unemployed. We weren't expecting to count them in the housing market (ever!).
The purchasing power of those still employed (Bureau of Labor Statistics - 20 million jobs were lost as of May 10, 2020, with the unemployment rate up to nearly 15%), can afford bidding wars and can afford to purchase what they want with rates never seen before. With supply of listings down almost 25% year over year in the Triangle, will home prices fall? Answer? Don't answer that. It's too obvious.
I hate to say what all Realtors say (I'm not a Realtor), but now is the time to purchase real estate in the Triangle. And I haven't even touched on the explosion of people leaving New York and New Jersey (etc.), or the fact that inflation might someday come back and we won't ever see rates this low again.
So, put your best foot forward and make a full price offer (that's my favorite "bad" quote a Realtor used to say). But sadly, this is probably the time to do that (sadly for home buyers). Remember, people have to live somewhere. And the option of living in a smaller space, or on someone elses' couch/dime.....just got a lot more costly to ones' health and welfare.
Remember, ADRMortgage.com when it comes to your mortgage. We have over 15 years of zero BBB complaints and will take care of you like family. Although you can't stay on our couch! Disclosures can be found at www.adrmortgage.com. NMLS 88010. MLO 103418. Andy May. 919 771 3379.
At ADRMortgage.com (American Dream Residential) we shop many investors. All loans (30 year fixed) go to the federal government. All loans. There is a requirement that if an investor puts a 30 year fixed rate on their balance sheet that they hold 100% capital against the risk. And over 30 years at a 3% coupon (3.2% APR) - that's quite a risk. The consumer's goal should be to go to a reliable source to get the lowest rate they can find. That's where ADRMortgage.com comes in. We've been in NC/VA for over 15 years without a single BBB Complaint. We compete on Rate. We have a professional processor work the roughly 400+ pages of documents that are now necessary to close a federal government loan (Fannie/Freddie, VA, USDA, or FHA).
With that said, some lenders have imploded this year. When the federal government entered the bond market and bought copious amounts of debt, many banks were in a world of hurt. One of the largest had to lay off their staff and stop doing business. Others, stopped doing certain loan programs. That's why a broker is so important. We can shop on your behalf to find the investors that are still in the market with great rates. And that's not like the bogus lead generators that say they'll let banks compete....and then sell you as a lead. That's what we do. We try to serve you by shopping for the best 30 year fixed rates. And we have some awesome investors.
Call us for a hassle free conversation and ask about our Rapid Refi program. We take pride in serving you, and it shows. Andy May 919 771 3379. NMLS 88010 MLO 103418. We are licensed, these are not just registration numbers like you find at many banks. Make sure you are working with a trusted licensed loan officer. Accept no excuses (registration is not a license).
Simply put, rates are all-time lows. Call us for a quick rate quote. We blow everyone else away on great rates. 919 771 3379. Andy May
When I hear about these One-Stop shopping services it makes me cringe. Homeowners Insurance, title insurance, real estate sales, mortgage, life insurance, credit cards. Why not just get it all with one phone call. Simple answer. It costs about double when you get this wonderful "convenience" and it takes the same amount of time. It's just like when you sell your home to one of these companies (and there are dozens of them now) that promise to purchase your home for a fixed price. Then you find out why they do it. They make a ton from your thought that you are saving time. Simply lower your asking price on your property by $100k and you'll sell fast. When it's too good to be true, it is. Call ADRMortgage.com at 919 771 3379 for quick and easy answers to your questions.
Just locked someone at a combined first and second rate of 4.03%....into a jumbo size combined mortgage. Both loans are fixed. APR is under 4.75%. The first is $510,400 and the second is $48,000. Working with ADRMortgage.com professional loan officers makes a real difference. We believe we saved this customer about $4,000 per year. Plus with credit repair we saved another $8k. Customers love ADRMortgage.com. Call us anytime 919 771 3379. 15+ years of ZERO BBB complaints.
Last month was a good month for clients. Rates were as low as 3.25% (APR of 3.42%) on a cashout refinance and 3.5% (APR of 4.25%) on an FHA purchase. 30 year fixed of course, with rates this low the Adjustable Rate Market is actually higher. Contact ADRMortgage loan officers for a hassle free quote. Thank you for your business as we enter our 16th calendar year of no BBB complaints. February 2020 marks our 16th fiscal year of no BBB complaints ever.
Many investors guarantee free float-downs on rates. While these guarantees exist, they rarely are implemented (it's shady). We recently locked and closed two consumers at 3.625% (rates vary depending on borrower profile). Both were closed within the 45 day window of rate locking. At ADRMortgage.com we also have a RapidRefi program that helps lock in the rate you want. If you are at 4.25% and want to lock at 3.5% - we can show you how. Call us to better understand what's real and what's fiction in the mortgage industry.
Also, SOFR is replacing LIBOR - SOFR is a synthetic treasury index that is harder for banks to manipulate. That's why LIBOR is no longer going to be used for mortgage ARMs (adjustables). The short term over-night market blew up this week, and the Feds pumped $90 billion to prop up this market (which is to say, investors hate uncertainty - and rates go up when there's uncertainty).
Longer term rates have risen by about 1/8th of a point over the last 30 days. I expect them to come back down another .25%. That equates to about 3.5% on a 30 year fixed with 25% down payment and excellent credit. All borrowers are priced according to their individual financial profile so these rates may become available in the fourth quarter. If you are waiting for these rates I suggest you have your application in (no charges from ADRMortgage unless we close you: You will have to pay for third party services such as an appraisal, if necessary). To give you perspective on rates - the 30 year fixed hit 3.25% as the lowest locked mortgage rate ADRMortgage ever did. Consumers sitting on the fence may be disappointed if rates track north next year.
All 30 year fixed loans in the USA go to the federal government or require 100% capital support (meaning that the lender loses money on originating 30 year mortgages, which banks won't do). The consumer's goal is to deliver loans to the federal government through the least expensive channel found. That's where ADRMortgage.com comes in. With low overhead, ADRMortgage.com is the consumer's optimal option to achieve the best mortgage rates and service.
Here, ADRMortgage.com develops a short and easy to understand down payment profile for each loan program.
1. Fannie Mae - 3% down payment (times purchase price);
2. FHA - 3.5% down payment;
3. USDA and VA - 0% down payment.
In addition to the above down payments, consumers will be required to meet many other underwriting conditions. For example, most loans require at least 2 months of PITI (monthly payment if principal, interest, taxes and insurance) in reserves (checking account). For more information about qualifying for loans contact Andy May 919 771 3379 for a quick and simple conversation. www.adrmortgage.com. NMLS 88010. NLMS LO 103418. Equal Opportunity Housing. Zero BBB complaints since 2005. Not one.
Don't be fooled by fake rates. Many companies advertise rates. All companies don't give you the rates they advertise everytime.
At ADRMortgage.com a quick email, text or call gives you the ammo you need to know what your rate will be. The mortgage process has gotten complicated over the last 10 years....banks aren't regulated by states and customer may wind up paying tens of thousands more at the closing table when using a bank.
I just had a customer go with a Kentucky bank. At the closing his payment was $1600 higher then he expected and he paid a ton more. Work with a company that has ZERO BBB complaints ever to date (nearly 15 years). Call Andy May 919 771 3379