According to the US Census bureau's third quarter housing report released this week, home ownership rates in America are down to their lowest point in 19 years. Sounds like bad news for buyers and sellers alike, right? Not so fast...a closer look reveals that buyer behavior has more to do with it than strict market conditions.
Mortgage rates have been stable over the last 18 months, and are still at near-historic lows -- yesterday's advertised rate for a 30-year fixed mortgage at one local bank was 4% - exactly what it was in June of last year. In addition, lending standards have loosened considerably over the last year. We are seeing bridge loans, asset-based underwriting, and first-time homebuyer products hitting the market for the first time since 2008. In fact, USDA, FHA and MA Housing all now offer low-to-no down payment products with little or no PMI. The bar for first time homeownership has not been lower in many, many years.
So why are ownership rates so low? According to industry analysts, it is the changing life choices of millenials that are driving market conditions. Young people are getting married later, having children later, and consequently waiting longer and longer to buy a home. Sam Zell of Equity Residential was quoted in Bloomberg as saying that "the deferral of marriage has...a staggering impact on real estate."
There hasn't been a better time to buy a home in recent memory - near-historically low interest rates, continually loosening lending and underwriting standards, and a balanced local inventory ensure that you can find a home at a good price, finance it at a great rate, and put very little money down.
As always, if you are thinking of buying, give us a call - we would be delighted to answer your questions, and help you take advantage of this excellent market. We look forward to hearing from you!
If you are planning on securing funding from a bank or other lending institution for the purchase of your home, that institution will require an appraisal by a third-party. This appraisal will be used to establish an independent opinion of the value of the home, which assures the bank that their loan is adequately secured.
Four levels of certification
Appraisers in Massachusetts arecertified at four levels by the Massachusetts Board of Registration of Real Estate Appraisers.
1. The first level is as a trainee. These appraisers operate under the supervision of a Certified Appraiser and cannot inspect a property without him or her present.
2. Licensed Appraisers can independently appraise any residential property up to $1,000,000, but cannot appraise homes of greater value without the supervision of a Certified Residential Appraisers.
3. Certified Residentialappraisers can appraise any residential property.
4. The final and highest level of certification is Certified General Appraiser. Since these appraisers are in high demand to appraise commercial property, they are rarely used to appraise residential property.
Appraisal vs. Comparative Market Analysis
Appraisers use a process very similar to a Realtors Comparative Market Analysis to arrive at a value for your home. They ideally look for three identical homes sold on the same day to use for their comparison -- this is clearly impossible, so they generally use comparable sales within similar areas, within the past year.
How we handle appraisalsIf you list your property with us, we make sure to attend any bank appraisal of your home. While it is not necessary for the listing agent to attend the appraisal, we feel strongly that professional representation of the seller at the appraisal is a valuable means of advocating for our clients. We work as closely as possible with the appraiser to ensure that they are well-appraised of any significant factors which affect the value of the home, but which may not appear in the appraisers database of recent sales. For example, major town improvements to the neighborhood, recent improvements made to the home or property, or pending sales in the area are all significant factors which affect the value of your home, but which may not be readily available to the appraiser. We make sure that they are aware of these factors to ensure that the home is valued as accurately as possible. Furthermore, we only recommend lenders who we know use local and experienced appraisers. The choice of lender is yours to make, and the appraiser is hired by the lending institution, but we are always available to make recommendations or answer questions you may have.
Pertinent short sale updateDue to the shoddy title work that was done in the previous few years, many title issues are surfacing that are taking an inordinate amount of time to resolve and may, in fact, not be resolvable. There has been much talk about new rules and regulations that are supposed to make short sale purchases more "user friendly". These rules are in place, but, they are not necessarily being adhered to by the Lenders involved. Therefore, it is still taking a lot of time to move deals along. Additionally, FHA rules are tightening up for Buyers and properties. It is harder to get a Buyer qualified and distressed properties are not as easy to finance as they were in the past.
In sum, while short sales are often priced attractively, they are not for the faint of heart. They should be approached only by Buyers who have financing in place, have a strong stomach and are patient. Good luck!
Thinking of buying property?
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The following factors are taken into consideration:
- 35% --payment history
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- 15%--length of credit history
- 10%--new credit
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Community Banks versus National LendersRecently, banking industry gnomes come up frequently in casual conversation. Everyone seems to have a horror story about their brother's cousin's friend's mechanic and a banking issue. While many of us have long standing relationships with banks and are are happy with our lenders, an equal number ofus seem to be distressed for one reason or another.
Community banks are often easier to deal with and more accommodating than large nationwide banks.Community banks have a vested interest in their local communities because they generate most of their deposits locally and make most of their loans within the community. Bank officers are typically involved inlocal affairs and activities and are accessible. Also, they know the nuances ofthe areain which they are located.
This can be helpful in dealing with Cape Cod issues such as septic systems, flood zones, water recharge areas and conservation restrictions. Furthermore, the decision making process is often more nimble than large corporate banks can provide.
Ultimately, when securing a loan we recommend thatbuyers explorelocal lenders. Finding the house and negotiating the price is only about 50% of the process. The other 50% is securing a loan and is often the least fun.Give us a whistle and wecan give you some names of goodCape Cod lenders.