Buyers Aren’t Waiting—They’re Thinking Outside the Box | June Market Update
Demand for Adjustable-Rate Mortgages Hits Highest Level of the Year
As mortgage rates rise, many consumers seek adjustable-rate mortgages (ARMs) as an avenue to get into their dream homes as soon as possible. ARMs start with lower interest rates than fixed-rate mortgages but can change based on future market conditions, adding some risk. Recently, more people are choosing ARMs, with their share of mortgage applications reaching the highest level this year, compared to much lower demand when rates were at historic lows in 2021.
Meanwhile, rates for ARMs have slightly decreased, making them more attractive to some borrowers. Persistent inflation suggests that high rates might continue, challenging both the housing and mortgage markets. Overall, fewer people are applying for mortgages or refinancing their existing loans, as high rates offer little incentive, allowing for others to take the leap and get an adjustable-rate mortgage instead of waiting.1
More Buyers and Parents Adopting Shared Equity
More parents are helping their adult children buy homes to relieve the costs that come with it. Take Leslie and her husband Conrad, for example, a couple interviewed by Realtor.com who live in the pricey Silicon Valley area, and thought they’d rent forever due to the high cost of buying a home. However, with the help of Leslie’s parents, they managed to purchase an $850,000 condo. The parents, who benefited from real estate investments in the 1980s, saw this as a way to help their kids while investing in their future. Together, they crafted a shared equity deal, with Leslie and Conrad owning 25% and the parents 75%. This arrangement allowed them to afford a property they loved, complete with amenities like a pool and gym. The financing was carefully structured with a legal agreement to avoid potential conflicts. This story highlights how family support and smart planning can make homeownership possible even in high-cost areas, providing a path forward for those struggling to enter the housing market. If you’re a parent or know of a parent interested in structuring a shared equity loan for your child or children, reach out and we can strategize a plan that works for all parties.2
Why a Condo May Be a Great Option for Your First Home
Finding your first home can be tough, but considering condominiums, or condos, might be a smart move. Condos are generally more affordable than single-family homes, making them a great option for budget-conscious buyers. According to the National Association of Realtors (NAR), condos often cost less, providing a financially easier path to homeownership. Besides saving money, condos offer several perks: they require less maintenance, allowing owners to skip chores like mowing lawns or fixing roofs; they help build equity over time as you pay off your mortgage and the property’s value increases; they often include amenities like pools and parks; and they foster a sense of community with close neighbors and social events. Condos can be an excellent step into homeownership, offering a practical and enjoyable lifestyle. I would be delighted to discuss condo ownership in your market further or assist you in exploring available condos in your desired area.3
Did You Know?
As technologies like artificial intelligence (AI) and augmented reality (AR) continue to develop, the real estate sector is only beginning to explore them. Future developments in AR could include a wider choice of more realistic staging options. Buyers may also be able to explore the neighborhood they are considering without ever having to leave their homes.4
New Survey Shows Veterans Are Optimistic About Homebuying
A survey of over 850 Veterans and service members found nearly two-thirds believe it’s a good time to buy, with a third planning to purchase this year. In the long term, 58% of Veterans plan to buy a home within the next five years. Despite the economic challenges posed by the pandemic, which led many to adjust their homebuying plans, most Veterans expect their financial situations to improve. In 2021, the VA backed a record 1.2 million loans, with many Millennials and Gen Z Veterans taking advantage of low mortgage rates. While Veterans foresee rising interest rates and home values, 80% still see homeownership as a better option than renting and a solid investment. However, misconceptions about down payments and credit scores may be holding some back from exploring homeownership through their VA loan benefits. Luckily, I have experience working with veterans in helping them finance their home, so feel free to reach out if you or someone you know can benefit from a VA loan.5
A Beginner’s Guide to Credit Repair
Repairing your credit score is essential for many milestones in life such as buying a car, renting a home, or getting a mortgage. It’s no secret that a higher credit score usually translates to better loan rates, but how can you boost your credit score to ensure it’s at an optimal level? In our credit repair guide, we suggest regularly reviewing your credit report for errors and disputing any inaccuracies. Improve your score by making timely payments, keeping credit card balances low, and not opening too many new accounts at once. The “snowball method” can also help pay off debts by targeting the smallest debts first. Be cautious of scams promising quick fixes and follow good credit practices, like setting up automatic payments and monitoring your credit. If you or someone you know needs a recommendation for a trusted credit repair source, reach out and I’d be happy to connect you.6
Sources: 1 cnbc.com; 2 realtor.com; 3keepingcurrentmatters.com; 4 entrepreneur.com; 5 news.va.gov; 6 rwmloans.com
