By Danny Thompson, Director of Keller Williams Realty Publishing

Recently, I was reading through The National Association of REALTORS 2011 Investment and Vacation Home Buyers Survey and I got to thinking: With the opportunities that this market is affording us, how much of the buying population is going to be investors? Let’s start with some interesting stats: Total home sales for 2010 was 5.2 Million new and existing homes, keeping close pace with 2009 sales.  The beginning of the year saw a large amount of first-time home buyers in the median and below median price range, followed by a slight lull of sales after the tax credit opportunity ended, ending the year fairly strong with continued low mortgage interest rates.

None of this is really news.

What IS interesting is that investor purchases were 17% of that amount, roughly 884,000 home sales, with an average sales price of $94,000, down from $105,000 in the previous year.  This is actually a smaller percentage than in years past … in 2005, investors were buying about 25% of all residential properties sold.  The decline has much to do with the tightening of the mortgage requirements, and of course was influenced by the decreasing home values.

Continue reading ‘NAR releases 2011 Investment and Vacation Home Buyers Survey, and the numbers may surprise you!’

Home affordability in the United States is nothing short of amazing. Even though current price trends for the United States and Canada are considerably different, the same principle applies in both cases: clients need perspective and they need to look beneath surface statistics before making informed decisions

The first chart below dramatically illustrates the impact of lower interest rates on housing costs, and the relative affordability of housing in the United States. The cost of a loaf of bread and a gallon of gas has more than tripled since 1989, and car prices have nearly doubled. While the median price of a new home has increased by 70 percent, mortgage interest rates, which stood at 10 percent back in 1989, are less than half of what they were back then. The impact of rock-bottom interest rates is that the monthly mortgage payment on a median priced home in the United States has increased by a mere $4 since 1989.

Unless a buyer is paying cash, the monthly payment tends to be a far more relevant number than the home’s actual purchase price. So for buyers who are waiting for home prices to hit the floor, before buying it’s important to point out that the possibility of a slight drop in the price of a home will have very little impact on the monthly payment, while even a slight rise in interest rates (a far more likely scenario) will have a significant impact.

Continue reading ‘Do your clients get it?’