Donna Yates, Move 2 North Georgia.net: Housing Affordability and Buying Power - The American Dream

Housing Affordability and Buying Power - The American Dream

North Georgia Mountains, Real Estate, Buying Power, Interest Rates, Homeownership, American Dream

 

It is no surprise to anyone by now regarding what's happened in the housing market over the last several years.  Yet, consumers continue to be plagued with negative news with some going as far as reporting that homeownership is no longer the American Dream.  We are dominated by sensational headlines and negative sound bites regarding real estate virtually 24/7.  The  flip side of all the negativity is home prices on a national basis are significantly lower than their peak just a few years ago and rates are at historic lows.  According to the National Association of Realtors®, housing affordability is near record highs.

The Housing Affordability Index pegged at 100 is 179.10 as of Sept. 2010 which is the latest report meaning this is an incredible time to buy.  Housing has never been this affordable!  And what about homeownership? In the latest survey, 85% of the respondents believe it remains critical to the American Dream.  Homeownership provides stability, a place to raise families, instills pride in our neighborhoods and communities, reduces crime and builds wealth.  Yes, builds wealth.  

We must keep it all in perspective.  If we compare home prices now to what they were at their peak, then many would more than likely disagree with me about building wealth but remember, home prices were overly inflated at the peak too.  Owning a home is a long term investment, not something to be treated like a revolving line of credit. Paying down the principal along with a realistic view of appreciation means you are most certainly building wealth.

I am a firm believer in balancing emotion with logic and negativity with both sides of the facts.  This is my approach when alerting my clients to buying opportunities.  Many potential buyers focus on price, with little thought to interest rates and how that affects their buying power. A purchase price is mostly considered only at the the time of buying or selling. However, a house payment is something a home owner must deal with every single month for years to come. While prospective buyers are focused on the lowest price possible, they oftentimes underestimate the importance of interest rates affecting their monthly payment and buying power.

 

For example:

Interest rates are creeping up and 1/2% increase in rates equals a 5% decrease in your buying power?  

 

As an experienced and knowledgeable Realtor®, I pride myself on the ability to help clients make sound home buying decisions.  I can help you run the numbers, look at the facts, assess options based on your individual needs and objectives that will enable you to take advantage of the buying opportunity of a lifetime.

 

Consider: Whether you rent or buy, you pay for the house you occupy.  

 

 Move 2 North Georgia, Donna Yates, Broker Associate, Blue Ridge Real Estate

                    Move 2 North Georgia  

 Donna Yates
Broker Associate
Realtor®, GRI - Graduate Realtor Institute
706-633-0644 Mobile 
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Donna Yates
Associate Broker, GRI
706-633-0644 Mobile
Serving North Georgia Mountains and Metro
Metro Brokers - Better Homes and Gardens Real Estate
706-515-7500 Office

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Comment balloon 20 commentsDonna Yates • January 17 2011 08:56AM

Comments

Hi Donna....Great post, you certainly hit the nail on the head with post.

When I started in Real Estate, people bought a home knowing they would own it in 25 years...that still applies today except it's probably 30-35 years. Nice forced saving plan, bets paying rent !!

Posted by Fred Carver Personal Real Estate Corporation, Accredited Real Estate Consultant (RE/MAX Camosun Victoria BC Real Estate) almost 8 years ago

Fred: I'm absolutely blown away when I hear the media report that homeownership is no longer the American dream.  Talk about sensationalism or either someone has a screw loose for sure.  It's unfair to compare housing prices today to an over inflated market of yester year.  I would say that prices are finally shaking out where they really should be.  Real estate is picking up here though and I think buyers are realizing just what an opportunity there is that exists right now which could very well be once in a lifetime.

Posted by Donna Yates, Blue Ridge Mountains (BHGRE - Metro Brokers) almost 8 years ago

Interest rates have been on the rise since early November.,  Only time will tell if the lowest of the lows on the rates are now gone. 

Posted by Rodney Mason, FHA 203(k) & HomeStyle Renovation-AL,FL,GA, SC, TN (On Q Financial) almost 8 years ago

Hi Donna...Congratulations on your Feature post...:O))

HAVE YOUR BEST YEAR EVER IN 2011 !!

Posted by Fred Carver Personal Real Estate Corporation, Accredited Real Estate Consultant (RE/MAX Camosun Victoria BC Real Estate) almost 8 years ago

Long term is absolutely right.  Buy it to live in it!!  (And BTW the 50+ acres sounds like a lovely parcel).

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) almost 8 years ago

Donna - Great post! If buyers just look at the cost of rent and the fact it will increase you'd think that would be a great deciding factor for many. 

Posted by Carla Freund, Raleigh - Cary Triangle Real Estate 919-602-8489 (Keller Williams Preferred Realty) almost 8 years ago

Fred:  Thank you.  The feature is unexpected but much appreciated.  Honestly, I really never have points and featured blogs on my mind when I write one but nonetheless, it is very nice.

Carla Muss Jacobs: Long term sort of got lost in the boom years I think, especially with all the flippin' flipping! LOL

Carla Freund: I'm afraid buyer's are making a big mistake by not considering how interest rates affect their buying power if they are too focused on the actual sales price.  

Posted by Donna Yates, Blue Ridge Mountains (BHGRE - Metro Brokers) almost 8 years ago

Great post and it certainly is becoming a much better time to buy than previous years.  I also agree about your comments on interest rates how they affect buying power!

Happy New Year!

 

Posted by Tracy Santrock, Raleigh - Cary Realtor/Broker In Charge (Fonville Morisey/Santrock Realty Group, Inc. ) almost 8 years ago

Tracy: Happy New Year to you too!

Posted by Donna Yates, Blue Ridge Mountains (BHGRE - Metro Brokers) almost 8 years ago

Hi Donna Great post and it will be featured in North georgia Mountains. I have to call you with a referral today . I amglad I saw this

Posted by Charlie Ragonesi, Homes - Big Canoe, Jasper, North Georgia Pros (AllMountainRealty.com) almost 8 years ago

Donna - Great Post. Yes, it is a great time to buy now. It seems the market is picking up.  I've had people tell me they think now is when they can get the best deal.

Posted by Carla Freund, Raleigh - Cary Triangle Real Estate 919-602-8489 (Keller Williams Preferred Realty) almost 8 years ago

Hi Charlie: It's funny but I only meant to edit this blog but when I did it put it back up at the top again as best I can figure.  I didn't realize AR would do that but I'm glad it did so you got to see it and maybe send over a referral.  I really appreciate that.

Carla:  I guess it all depends on who you listen too, but the media tells a much darker story as usual.  All the more reason why a buyer really interested in buying should consult with a Realtor for their respective market. The deals are most definitely out there.

Posted by Donna Yates, Blue Ridge Mountains (BHGRE - Metro Brokers) almost 8 years ago

Donna, You have put to words what so many of us have been saying for a few years. If only a media would read this and STOP reporting that the sky is falling. People would not be so afraid of making the purchase and ending the rental cycle their in. I spoke to my neighbor the other day and they paid $26,000 last year alone in rent. We as Realtors should follow your example and get the word out. "The Sky's Not Falling"

Posted by Lisa Coates, Residential Home Sales Specialist (Precision Realty) almost 8 years ago

Donna, Buying power doesn't seem to be a popular media topic but it's SO important for home buyers.  You're right that purchase price is not the be all end all, it's about how much they're going to be paying each month for that home. That's what's going to matter to them each and every month not what the purchase price dollar amount was.  Great points and congrats on the feature!

Posted by Diane McDermott, Charlotte NC Real Estate Market (Realtor®, GRI, Landis e2 Real Estate, LLC) almost 8 years ago

Excellent post. I agree whole-heartedly. Buyers should contemplate a purchase now before rates start to climb.

Posted by Tammie White, Broker, Franklin TN Homes for Sale (Franklin Homes Realty LLC) almost 8 years ago

Lisa: Ouch! $26,000 in rent.  That's more than enough to make me buy.  I am astounded at all the buzz about homeownership is no longer the American Dream.  But all one has to do is look at the alternative ask, do I really want to pay $26,000 or however much, doesn't matter if it's $2600, in rent.  That's money I can put to work for me not for someone else. 

Diane: I feel actual sales price is paramount but when buying a home, the monthly payment is too and it's been my experience with buyers that they are not really considering the monthly payment and what a slight increase in interest rates do to their own buying power.  All the more reason it's up to professionals to help the consumer look at all sides.

Tammie: Given the unbelievably low prices, low interest rates and so much to choose from, buyers who can buy I hope are buying but I still see so many sitting on the fence.

Posted by Donna Yates, Blue Ridge Mountains (BHGRE - Metro Brokers) almost 8 years ago

I think this down turn has caused a reset in the way people view homes.  And their investments.  I have to say though, I do agree with Robert Kiyosaki and his opinion about one's residence.  It's not really an investment.  And shouldn't be viewed as such.  If you want to INVEST in real estate then you need to become a landlord and you must be certain that your investments have positive cash flow.  A lot of investors forgot that caveat at the height of the market and depended upon price appreciation solely.  We also need to realize that real estate is not the ONLY investment vehicle out there.  Diversity amongst investment products is a crucial as diversity within an investment class.  Another caveat that people got sunk by in both the .dot com bubble and the housing bubbles.  Good post Donna and best of luck to you.

Posted by Jerry Murphy, CRS, SRES, Anthem, Phoenix, and Scottsdale AZ Real Estate (Long Realty West Valley) almost 8 years ago

I'm with Jerry in comment #17 on this one...

Buyers on the sidelines will jump in as soon as they start seeing some type of price appreciation. Unfortunately, program after program has only dragged everything on and given no confidence to the skittish buyers that home values are still not going down.

 

Posted by Paul Francis, Las Vegas Real Estate Agent - Summerlin Homes (Francis Group Real Estate) almost 8 years ago

I am seeing more people with cash purchase real estate as an alternative investment. First time home buyers are purchasing homes as an investment.

Posted by Harry F. D'Elia, Investor , Mentor, GRI, Radio, CIPS, REOs, ABR (Real Estate and Beyond, LLC) almost 8 years ago

Jerry:  I appreciate your well thought out input.

Paul:  True, but in the meantime, they are missing some exceptional opportunities, and we know very well, real estate is a fantastic investment but it must be considered long term, not a place to make $100k profit in on a few months times.  Long term investment was forgotten during the boom.

Harry: I am seeing more cash buyers too.  Even better! 

 

Posted by Donna Yates, Blue Ridge Mountains (BHGRE - Metro Brokers) almost 8 years ago

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