According to a recent survey from Fannie Mae, only 19% of Americans believe that now is a good time to buy a home. Of course, given the high home prices, rising mortgage interest rates, and persistently high inflation, this is not too surprising. With virtually the cost of everything rising, it is quite understandable why so many Americans would feel it is not a good time for a home purchase.
Key housing statistics
According to the National Association of Home Builders, approximately 43% of the homes sold in the second quarter of 2022 were within the budget of a family earning the median income of $90,000 per year. Below are some key housing statistics:
- The median home sale price at the beginning of 2022 hit $433,100. This figure is up from $329,000 at the start of 2020.
- The median down payment for a home purchase was $35,000 in the second quarter of 2022. This was a 34.7% increase from the prior quarter.
- As of July 2022, listings remained on the market for two weeks. This is the shortest amount of time on record according to the National Association of Realtors®(NAR).
- According to the NAR, existing-home inventory came in at 1.31 million in July 2022. This is up 4.8% from June 2022.
Saving for a home
- Pay down your debt: Although this may seem obvious, many people do not follow this advice. Although the amount of money you save in your bank account is critical when saving for a home purchase, it is equally important to focus on the amount of money that you owe in debt. Decreasing the amount of debt that you have in the form of credit cards, car payments, and student loans is extremely important. By lowering your debt-to-income ratio, you will be in a much better position to qualify for a mortgage.
- Factor in closing costs when saving: Saving for a home is more than just saving for a down payment and any money needed for moving in and addressing any items. It is important to remember that you also have to account for closing costs. According to a recent analysis, the average closing costs in 2021 were $6,905.
- Consider all options for down payments: Although ideally buyers will put 20% down on a home purchase in order to avoid having to pay property mortgage insurance (PMI), this is not an absolute requirement. If necessary, you may qualify for various low down payment programs. Consulting your mortgage broker will be a great first step.
- Consider your career options: Whether it is applying for additional roles of responsibility with your organization or simply asking for a raise, additional income can really add up over time when saving for a home. In some cases this may even mean switching jobs to a new organization. According to a recent study from the Pew Research Center, sixty percent of workers who switched jobs over the past year earned more money in their new roles, even accounting for the fast pace of inflation.
Although the real estate market is in a transition period, it is highly unlikely to expect that home prices will be lower a decade from now. As for interest rates, this is highly uncertain. Furthermore, it is critical that you learn about your local market specifically, when saving for a house. Although national headlines may tell a certain story when it comes to the housing market, your local market may differ considerably. As always, having a local, professional, and knowledgeable real estate agent should be your first step to success. Are you in the South Florida market? Contact the Live South Florida Realty, Inc. team today! In addition, be sure to download the free Florida Home Search app as well.