Why are homebuyers more optimistic than they have been in the past few years? Here’s what we found.
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Here’s a paradox for you: Right now, homebuyer confidence is at an all-time high,
according to a survey performed by Fannie Mae. Furthermore, an increasing
number of people, particularly renters, think now is a good time to buy a home.
Yet at the same time, housing inventory
remains very tight. It’s down 6.5% nationally from last year. Home prices
are also up 6.9% nationally over last year.
In other words, homebuyers are optimistic at a time that the market seems to be
favoring sellers. So, what's going on? Why are homebuyers so optimistic all
of a sudden? Here are three possible explanations:
1.
Lending is loosening up. Over the past several years,
mortgage rates have seen historical lows. This has meant that homes are
actually more affordable, in spite of the increase in prices. However, lending
has been very tight. Fortunately, that’s changing. Lenders are approving mortgages at the highest rate
since 2011, with 77% of mortgages for home purchases approved.
Lenders are approving mortgages at the highest rate since 2011.
2. Jobs
are looking good. At the moment, fewer homebuyers are
worried about losing their jobs, according to the same Fannie Mae survey. It's
not just job security that's contributing to greater optimism about buying a
home. Overall income is higher, making homes more affordable by comparison. The
median household currently has 150% of
the income needed to buy a median home, compared to a historical average of
just 125%.
3.
Long-time renters are ready to buy. Millennials, the
generation of people born after 1980, have largely opted out of homeownership
until now. They have been renting for a longer time, putting them higher up on
the pay scale compared to previous generations of first-time homebuyers. But
now, many millennials are finally hitting an age when they are willing to
commit to buying instead of renting. This is reflected in the Fannie Mae
report, which states that much of the increase in homebuyer optimism comes from
current renters.
What all does this mean for you? If you're
looking to buy a home, all of the above reasons should give you confidence that
now is indeed the right time to buy.
If you’re thinking
about buying or selling a home, click the links above to search for homes on
the MLS or find out how much your home is currently worth.
And if you have any questions about the Southern Maine real estate market, whether you're thinking of selling or buying, give me a
call at 207-553-2602. I'm here to help. I look forward to hearing from you soon.
