Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

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Home Affordability In This Ever-Rising Market?

Home Affordability Remains High in 2013

Home Affordability Remains High in 2013

Orange County – The housing market’s recovery is continuing to accelerate. Home prices are up nationwide, and competition for homes has rarely been fiercer due to today’s home affordability. And we’re only at the beginning of the upward slope. If 2013 is the year of the housing market’s recovery, 2014 is shaping up to be even better. And that’s not truer in any segment than it is in luxury homes.

From 2010-2012, the housing market was typified by purchases under a quarter of a million dollars. 2013 is showing itself at about half a million, especially in ‘high-vslue’ areas like Manhattan and Orange County. Next year will almost certainly be even higher.

The amazing thing is that homes are still selling like hotcakes despite a more than 10% drop in listed inventory — and inventory was scarce to begin with! Homes are being sold literally before they’re ever listed; the average sale time is below 40 days, and that’s considering that about 10% of homes don’t sell for at least three months. Just a year ago, it was hovering around 80.

Demand outweighs supply by a huge margin, and prices are rising because of it. For the first time since November 2009, a single-family residence sold for more than five million dollars in May. May also showed that 54% of all home-buyers were moving ‘up’. They purchased homes more valuable than the homes they were leaving. That’s higher than it’s been since at least 2003, and double what it was in 2010.

A big part of that upward mobility, especially around here in Orange County, is that jumbo loans are getting easier to obtain and priced very well compared to their conforming loan cousins. Low rates and

At the same time, conforming loans are still aggressively marketed. Even as the mortgage rates rise, buyers with good credit and strong financials can access low-to-no down payments. This is going to be among the best times in the foreseeable future to buy a home. It may not be as low in terms of price or rate as it was six months ago, but it’s also not likely to be this low again within the next five to ten years. This combination is unmistakable as measured by the home affordability index.

Buy The Best Home You Can As Soon As You Can

Every day that your transaction is delayed, there’s a good chance that your mortgage will become more expensive — by thousands of dollars. The best advice that we have to offer is simple: go to a mortgage lender you trust, get the best rate for the best home you can afford, and lock it in today.  It may seem difficult to make a choice with that kind of haste, but your pocketbook will thank you in the future.

How do you know how much house you can afford? Well, there are so many factors involved that it’s hard to tell, but using national averages we can give you a bit of an idea.  If you divide your monthly income by 3, you’ll have a pretty aggressive number in terms of what you can afford to spend on your mortgage each month.  Then subtract from that the cost of homeowner’s insurance,  property taxes and potentially private mortgage insurance. We then need to take a look at your other liabilities to see if you meet the requirements for total debt allowed.

Our advice? Give us a call and get pre-qualified. If you don’t qualify now, you’ll walk away with a plan to make it happen and learn your personal home affordability level.

 Scott Storace

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