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Home Affordability Today

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Affordability, are homes affordable today?  What are the components to home affordability?  Is buying power the same as home affordability?  OH MY, so many questions!  In this special episode of the Martini Mortgage Podcast, Certified Mortgage Advisor Kevin Martini answers these questions and unpack home affordability today. 

What is home affordability?

Home affordability is a measure of whether someone earns enough to qualify for a loan on a typical home based on the most recent price, mortgage rate and wage data.

…I want to share this with you.  Remember, when you think affordability there are many factors to consider such as home prices, mortgage rates and income.  Yup, when home prices rise and home loan rates rise, it does impact affordability, and experts project both of those things will climb in the months and years ahead. Simply put, that is why it’s less affordable to buy a home than it was over the past two years when prices and rates were lower than they are today. Keep top of mind that wages need to be factored into affordability as well. It is a fact that wages have been rising, and higher wages is a big reason along with historic low rates that, while homes are slightly less affordable, homes are not unaffordable today.

Raleigh Mortgage Broker and Certified Mortgage Advisor, Kevin Martini
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MartiniMortgagePodcast.com

It seems like today that whenever you hear the word real estate, you will also hear the word affordability. Right now, from a historical perspective, homes are still affordable. Granted, in spring 2021 homes were more affordable than they are right now in spring 2022. It is important to share, less affordable does not mean unaffordable.

My name is Kevin Martini and I am not just the host of the Martini Mortgage Podcast, I am also a Certified Mortgage Advisor with the Martini Mortgage Group which is located in Raleigh, North Carolina however I help families all over the great state of North Carolina and many other states too.  Welcome to episode 134 of the Martini Mortgage Podcast where I am going to unpack home affordability today. 

Let me share the Kevin Martini definition of home affordability.  Home affordability is a measure of whether someone earns enough to qualify for a loan on a typical home based on the most recent price, mortgage rate and wage data.  Buying power is sometimes confused with home affordability and it should not be. Sure thing, when mortgage rates rise, it will impact how much home you can afford but higher mortgage rates is not the only thing that impacts home affordability.

One of the three components of home affordability is home prices. An industry leader is CoreLogic and they are a trusted resource of real estate data.  In their most recent U.S. Home Price Insights Report they highlight that home values increased 19.1% from January 2021 to January 2022.  If you compare month-over-month data, home prices increased 1.4% in January 2022 over December 2021.This increase in home value has impacted home affordability but again, home are less affordability based on this metric, they are not unaffordable. Here is the good news, there is forecasted to be a deceleration of home values by CoreLogic. 

Please don’t freak out with the word deceleration.  In the simplest form, it just means homes are still going to appreciate, they are just not going to appreciate at the level they have.  Make sense?

Oh by the way, real estate is hyper local and that data from CoreLogic is national data not local data about say Raleigh, North Carolina.  Some markets like Raleigh, North Carolina are like to exceed national numbers.

Let me shift gears to talk about mortgage rates.  I know that mortgage rates are higher this spring versus last spring. In fact, they are about one percent higher today.  Yes, home loan rates are higher as compared to this time last year however but from a historical point of view, they are epic.  Let me get very personally right now, mortgage rates today are more than 50% less than when my wife and I purchased our first home.  When my wife and I purchased our first home we were able to secure an adjustable-rate mortgage in the mid 9’s and to be transparent, we thought it was a killer rate and looking back, it really was.

Where are mortgage rates headed?  It is difficult to predict where home loan rates are headed with the current global uncertainty.  The opinion of experts is mortgage rates will drift higher especially with the level of inflation we are experiencing. You see mortgage rates are based on Mortgage Bonds.  A bond is a fixed assets and the return is eroded by inflation, so inflation typically accelerates mortgage rates however did you know that homeownership is a hedge against inflation. Again, mortgage rates are low even though thye have moved up over the last several years but these low home loan rates are a positive factor to home affordability.

The third component to home affordability is wages.  Right now, wages is a very positive factoring mixed with the historical low mortgage rates. Wages are up right now and this increase in income has offset a portion of the higher home prices experienced.

Today, buyers’ income is still greater than required to qualify for a mortgage. On a national level the median family income was $88,417 and the qualifying income needed for a home loan was $60,096.  As you know, the Martini Mortgage Group is located in Raleigh and that is considered in the South.  Since real estate is hyper local let us look at the data for the South of the U.S. – median family income in the South was $80,683 and  only $57,768 was needed to qualify. 

Since we are getting hyper local, let us talk about the Raleigh Real Estate Report Card for March 2022.  Raleigh is located in Wake County North Carolina and the population is over one million.  Today there are over 400K renters in Wake County and over 25% of them, over 100,000 of the 400,00 renters can afford to purchase a home. It is important for me to highlight, the Wake County North Carolina affordably index is indication homes in are still affordable considering home prices, mortgage rates and wages.

Before I wrap episode 134 of the Martini Mortgager Podcast  I want to share this with you.  Remember, when you think affordability there are many factors to consider such as home prices, mortgage rates and income.  Yup, when home prices rise and home loan rates rise, it does impact affordability, and experts project both of those things will climb in the months and years ahead. Simply put, that is why it’s less affordable to buy a home than it was over the past two years when prices and rates were lower than they are today. Keep top of mind that wages need to be factored into affordability as well. It is a fact that wages have been rising, and higher wages is a big reason along with historic low rates that, while homes are slightly less affordable, homes are not unaffordable today.

To find out more about home affordability in our local area, just call a mortgage strategist with the Martini Mortgage Group by calling 919.238.4934.  We can discuss where home prices are locally, what’s happening with mortgage rates and how you and your family will be impacted by them..  Know this important fact, it should always be loan first and then go find your home. Deploying the loan first strategy will allow you to make an informed financial decision not an emotional one.

In closing, there is still a massive opportunity to buy a home today.  Perhaps the home will not be as affordable as the one your buddy purchased last year but it will still be affordable and homes are not unaffordable today. 

If you want trusted advice with a digital mortgage process that offer a great rate with certainty check out my website by going to: www.MartiniMortgageGroup.com – you can find some real world information there and you can also securely apply online or book an appointment with me.  Be sure to check out the Raleigh Real Estate Report Card which can be found in the learning center. 

My name is Kevin Martini and thank you for tuning into episode 134 which has been called; ‘Home Affordability Today’

Now it is time for the disclaimer:

This material has been prepared for marketing purposes only. This is not a loan commitment or guarantee of any kind. Loan approval and rate are dependent upon borrower credit, collateral, financial history, and program availability at time of origination. Rates and terms are subject to change without notice. The Martini Mortgage Group at PCL Financial is a division of Celebrity Home Loans, NMLS # 227765 with a Branch address of 507 N Blount St Raleigh, North Carolina 27604. You can contract Certified Mortgage Advisor and Producing Branch Manager, Kevin Martini NMLS# 143962 by calling the Branch and that number is 919.238.4934. For a full list and more licensing information please visit: www.NMLSConsumerAccess.org or by visiting www.MartiniMortgageGroup.com – Equal Housing Lender

The Homebuyers Opportunity This Spring

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Is there truly an opportunity for homebuyers this spring since we are in a sellers’ market? YES, there is a homebuyer opportunity this spring even with higher mortgage rates, tight inventory, and inflation.  Certified Mortgage Advisor Kevin Martini goes beyond the headlines to look at the real homebuyer opportunity this spring in this special episode of the Martini Mortgage Podcast, episode 133 (note: the Martini Mortgage Podcast is available on all streaming services).

If you are a renter and there is nothing wrong with being a renter and there is a time to rent however that time is not now.  Rents are rising and the only way one can truly escape rising rents is to consider purchasing a home and secure a fixed rate mortgage to lock in your housing costs. 

Certified Mortgage Advisor Kevin Martini in episode 133 of Martini Mortgage Podcast

As a Certified Mortgage Advisor the hot talking points the families I serve have right now is inflation, mortgage rates and concern relating to where home values are headed. 

Certified Mortgage Advisor Kevin Martini in episode 133 of Martini Mortgage Podcast

…it is sad that some fear the homebuyer’s opportunity this spring is not existent because of inflation. It seems like today every news article includes the topic of inflation.  I understand why, inflation is a real thing, and you may be concerned about inflation as it relates to purchasing a home and you may think it is better to sit on the sidelines because of inflation.  Inflation should not stop you from buying a home. 

Certified Mortgage Advisor Kevin Martini in episode 133 of Martini Mortgage Podcast
martini mortgage group transcript episode 132 martini mortgage podcast (1)

The Homebuyers Opportunity This Spring Transcript

Are you thinking of buying a home as a first-time homebuyer?  Are you a current homeowner however it is likely that soon your current house will not meet your needs or the needs of your family in the future or worse, you have already outgrown your house, or your home has outgrown you! For one that is thinking of buying a home for the first-time, for one who is a repeat homebuyer that is looking to upgrade or for one that is a repeat homebuyer looking to downsize – OH BY THE WAY, downsizing does not mean downgrading – this spring is a great time to take action.

My name is Kevin Martini, and I am a Certified Mortgage Advisor and this is episode 133 of the Martini Mortgage Podcast that I am calling, the homebuyer opportunity this spring. 

It is always a great time to explore the benefits homeownership. One can never be too early to explore homeownership options and one can never be too late to explore homeownership options. In case you are wondering, it is a great time right now even in a competitive market like we are in today. If you are a renter and there is nothing wrong with being a renter and there is a time to rent however that time is not now.  Rents are rising and the only way one can truly escape rising rents is to consider purchasing a home and secure a fixed rate mortgage to lock in your housing costs. 

Yes, I get it, inventory right now is tight and may represent a challenge but, even though the number of homes available for sale is low and could represent challenges, the search is worth it! Whatever way you look at it, homeownership is not just a stable long-term investment, homeownership allows you to lock in your housing costs for the long-term. 

I know what you are saying, what about taxes and insurance?  Yes, property taxes and homeowner insurance are not fixed costs since they can change from year to year and they may rise but your pure housing payment, which is the biggest portion of your housing expense will remain the same with a fixed rate mortgage.

It is a fact; homeownership can create wealth.  Wealth is created by appreciation and wealth is created by the retirement of your mortgage. Listen, if you rent today you are paying for a mortgage, granted you are not paying your mortgage, you are paying your landlords mortgage for them.  On the topic of wealth creation, last year the average homeowner gained $56,700 of equity and renters gained nothing.

The pandemic has highlighted that homeownership has not just tangible financial benefits but intangible benefits too! Homeownership has many perks but to me it provides me and my family with security and stability even in turbulent times like we experienced that last couple of years. Homeownership is not just about the dollar and cents however the dollar and cents make sense.

As a Certified Mortgage Advisor the hot talking points the families I serve have right now is inflation, mortgage rates and concern relating to where home values are headed.  Let me share what I share with the families I serve, let me start with mortgage rates.

There is no question that today, home loan rates are higher than they were last spring but from a historical perspective, mortgage rates are low and if I may say, mortgage rates are epic today.  For crumb sakes, when my wife and I purchased our first home the rate was in the mid 9’s! 

In case you are wondering, experts believe that rates later this year will be higher than they are today. Yes, home loan rates are expected to continue to rise and when they do, it will cost you and your family more.  Essentially when mortgage rates move upward by 1% your buying power is reduced by 10%. You just have to accept it, your buddy that purchased a home last year got a lower rate than you will today, it is what it is and however the current mortgage rate environment is still very favorable maybe not as favorable as it was but today it is more favorable than the experts are predicting by the end of the year. Here is the Kevin Martini bottom line: mortgage rates are expected to continue to rise and that means in the simplest form, it is going to cost you and your family more to wait to buy a home. If the thought of buying a home this year or maybe next year is beeping on your radar however you are waiting for rates to drop, you will be waiting in a line that is going nowhere and current home loan rate environment will be in the rearview mirror and you will likely say, ‘I wish I took advantage of the mortgage rate environment in the spring of 2022’.

Let me shift gears and talk about home values. I am a Certified Mortgage Advisor and some people call me a mortgage strategist but no one calls me a real estate agent.  Since I am not real estate agent, I need to research what leading real estate experts are saying.  I look at what CoreLogic, Fannie Mae, Freddie Mac, the Mortgage Bankers Association, the National Association of Realtors and at the Home Price Expectation Survey shares.  Not one of these entities believes that home values will be lower in 2022. They all are forecasting that home prices will increase in 2022.  Granted home values will likely not increase at same record levels we have seen in the past, but home prices are not going to be retreating.  Here is the Kevin Martini bottom line, if you are waiting for home prices to drop because you think homes will be more affordable in a few years you need to know that there is no data that supports this.  If homeownership is right for you and your family, you have a remarkable opportunity to get ahead of the curve by purchasing a home before the cost of the home goes higher and cost to ge the mortgage goes higher too!

Finally, it is sad that some fear the homebuyer’s opportunity this spring is not existent because of inflation. It seems like today every news article includes the topic of inflation.  I understand why, inflation is a real thing, and you may be concerned about inflation as it relates to purchasing a home and you may think it is better to sit on the sidelines because of inflation.  Inflation should not stop you from buying a home.  Let me say it again for the people in the back, inflation should not stop you from buying a home if anything it should accelerate your plans.  

Here is the Kevin Martini breakdown…

Home prices have been increasing and experts forecast home values will climb through the years ahead.  The only way you can protect yourself from higher housing costs is by locking in a historic fixed rate mortgage rate on a home you buy sooner than later. History has shown the best hedge against inflation is a fixed housing costs.

WOW, that was a lot of stuff.  If you want more information about what you heard or if you are not sure where to start let me share this fact, the homebuying process starts with the home loan not with the house. Connect with mortgage strategist with the Martini Mortgage Group by calling (919) 238-4934.

It is never too soon to explore your homeownership options…it is never too late to explore your homeownership options either.  If homeownership is right for you and your family then know this…the first step is always the loan not the home. 

There is never a substitute for having price and cost clarity before you start looking for a home. Get pre-approved before your home search not just pre-qualified!  To a seller a pre-qualification says you are just ready and willing whereas a pre-approval with a Certified Mortgage Advisor with the Martini Group says you are ready, willing and able.  It also communicates to the seller you are making a ‘same-as-cash’ offer and that is important to share in any market, especially in a tight real estate market like we are in today.

If you want trusted advice with a digital mortgage process that offer a great rate with certainty check out my website by going to: www.MartiniMortgageGroup.com – you can find some real world information there and you can also securely apply online or book an appointment with me.

My name is Kevin Martini and thank you for tuning into episode 133 which has been called; ‘The Homebuyers Opportunity This Spring’

Now it is time for the disclaimer:

This material has been prepared for marketing purposes only. This is not a loan commitment or guarantee of any kind. Loan approval and rate are dependent upon borrower credit, collateral, financial history, and program availability at time of origination. Rates and terms are subject to change without notice. The Martini Mortgage Group at PCL Financial is a division of Celebrity Home Loans, NMLS # 227765 with a Branch address of 507 N Blount St Raleigh, North Carolina 27604. You can contract Certified Mortgage Advisor and Producing Branch Manager, Kevin Martini NMLS# 143962 by calling the Branch and that number is 919.238.4934. For a full list and more licensing information please visit: www.NMLSConsumerAccess.org or by visiting www.MartiniMortgageGroup.com – Equal Housing Lender