While clocks may have sprung forward this month, leaving a lot of us bleary-eyed and feeling behind in our schedules as well as our sleep, recent news reveals some very important conditions that can help you get seriously ahead. If you haven’t said it yourself, you’ve surely heard others who wish they could turn back the clock, sending them back to glory days, skinnier days, simpler days or some other point in time they fondly remember. Day dreams and cocktail parties are full of discussions by those who want to “turn back time.” (Apologies in advance if that line takes you back to a painful 1980s Cher hit.) I know of two major things that have gone back in time – 10 and 42 years respectively. They are average home prices in the United States and the Housing Affordability index. While this information may not rock your world in the moment you read it, let me tell you how those things resetting to the distant past can set you up for a brighter future.
What probably doesn’t come as a surprise is that home prices in Minnesota are the lowest they’ve been since 2002. Housing prices peaked nationally in 2006, went into freefall in 2008 and ended up where they were a decade ago at the end of 2011. What I found pleasantly surprising was that there is optimism among the big brains who analyze these things and make predictions. Last year, Yale economist and co-founder of the Case-Shiller Indexes predicted prices might fall another 25%; however, last week he cited several economic indicators and consumer confidence numbers as indicators the market may have already in fact bottomed out. That’s good news for homeowners who owe close to or more than what their homes are worth and those planning to sell in the future and it’s a major wake-up call to anyone thinking of buying their first home, a second home, a larger home or any other type of residential property.
Here’s the eye-popping news you may not have heard: Housing affordability conditions are the most favorable they’ve been for Americans since 1970 – the year they started analyzing this and keeping track. What does that mean? The Housing Affordability Index considers things such as median home price, median family income and averages mortgage interest rates. The higher the index, the more buying power buyers have. The Housing Affordability Index was a record high 206.1 in January. An index of 100 is the baseline for a median-income household to have exactly enough income to qualify for the purchase of a median-priced existing single-family home with a 20 percent down payment and 25 percent of the gross income allotted for total mortgage payments. So this very interesting index that tracks our ability to buy homes is at two times the basic minimum for most people to purchase property. Don’t let the 20% down number scare you off – if you’re a home buyer in the Minnesota market, there are a host of programs available with as little as 3% down and if you’re a first time home buyer in Minnesota, we have a large number of first time home buyer programs that offer first time home buyers down payment assistance, closing cost assistance and even reduced 30-year fixed interest rates through Minnesota Housing Finance Agency and other city, county and even neighborhood incentives for first time home buyers! The National Association of Realtors predicts the index will remain favorable for home buyers throughout 2012. If that makes you want to kick back and take your time, please refer to the previous paragraph. : )
A lot of us can probably think of several things we’d like to shave 10 years off of, but we know in reality that wrinkles, vehicles and children can never go back in time. Home prices can – and our ability to afford them exceeded anything experts could have predicted. So we don’t need H.G. Wells or a sci-fi movie to use the past to improve our future. Finding out how to take advantage of these amazing, unprecedented market conditions is easy. Contact Carrie today.
Check out one of our upcoming, no obligation events. If you are a first time home buyer and you’re interested in learning more about buying your first home, down payment assistance or other special first time home buyer programs and financing options, attend our Free First Time Home Buyer Class! Our next First Time Home Buyer Class is coming up Thursday, April 19th from 6:30-8PM. Register for our First Time Home Buyer Class Now or call 952-808-2810 for more details.
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