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Where’s
the hottest real estate market? Look where the jobs are. Like a pebble
dropped into a lake, the market trends ripple throughout the areas where
the job market is hot. Just like the circles from the pebble being
smaller toward the center, today’s market is better around the
employment centers. The closer buyers are to the core markets, the
harder it is for them to find homes in the affordable ranges. And it’s
the availability of homes that is driving prices. What’s
attributing to this trend? Quality of life. Today, people want to live
closer to where they work. Less time commuting leaves more time for
playing. The major price appreciation is near the job centers, with
concentric circles emerging out based on transportation time to work,
availability of homes for sale, affordability and, for many homebuyers,
quality of schools. Last year the
Seattle metro area saw the cost of a house increased by 10 percent. This
is because the Seattle job scene continues to heat up. Usually someone
selling a house is looking to buy in the same area, but in an area where
job growth is hot, more people move in and create the situation we see
today. Over the last
four years, the success of the high-tech business communities around the
nation has created several high-growth communities. While the new
residents in these job centers are adding to the economic success of
their new hometowns, they are also one of the reasons housing prices are
rising. We are now seeing the accumulative effect of four years of
strong job growth—the shortage of affordably-priced homes. Another issue
compounding the housing crunch is growth management. With more people
buying than selling homes, and less homes being built, we experience a
housing shortage and prices go up. It is the basic economic rule of
supply and demand in action. If you’re a
homebuyer, don’t panic. There are some things homebuyers can do to
work through the challenges of today’s marketplace. Making smaller
down payments is one option. Today, most lenders have options for down
payments as low as 3 percent. There are even a few programs available
with a ZERO down option, and several programs allowing a buyer to
finance not only 100 percent of the purchase price, but up to 3 percent
of the closing costs as well! With these options, a buyer no longer has
to save for the traditional 20 percent down. Gifts and loans
from sources other than a bank can help with your down payment, but this
option can’t be used with all loan programs, so talk to your lender
before making plans based on money from family or friends. The most
popular program for this tactic is the FHA, which allows 100 percent of
your down-payment to be in the form of gift funds. Another popular
tactic, which can be used in a wider range of programs, is to borrow
from your retirement funds. If you have a 401K program with your
employer, you may be able to withdraw, without a penalty, for
your down payment and pay it back to yourself over a specified period.
Make sure you check Program choices
such as a three- or five-year adjustable rate mortgage can allow the
borrower to qualify for more home. This allows them to get into a
starter home now, and take advantage of any appreciation that may occur
– and use this equity to “buy-up” within three to five years
before the rate can adjust. Broaden the
search – For more value, a buyer can look into other housing units,
such as condos, smaller homes, or homes further from the job centers. By
looking beyond the core job centers, a buyer can get more home for their
money. Remember, it's
never too late to dive into the market. In fact, even with interest
rates ticking upward, waiting to purchase a home could end up costing
you money. |
