Renters spend 5% more than homeowners

NEW YORK – Oct. 27, 2011 – Rising rents are forcing renters to outspend homeowners on housing costs, according to a new study.

Since 2005, homeowners’ housing expenses have climbed from 31.9 percent of their household budget to 33.2 percent. In that same time period, renters’ expenses have jumped from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.

In the last 26 years, homeowners have increased the amount they spend on household expenses by 12 percent while renters have increased it by 22 percent, according to the study.

Earlier this month, Capital Economics economists noted that for the first time in 30 years the median monthly mortgage payment is about the same – or less – than the median rental payment.

Yet, with the bleak job market, homeownership rates continue to fall in many parts of the country, particularly among younger generations. CoreLogic found in its report that the homeownership rate for the 25-to-34 age group dropped from 51.6 percent in 1980 to 42 percent in 2010. For the 35-to-44 age group, homeownership rates fell from 71.2 percent to 62.3 percent over that period.

Source: “Renters Outspend Owners on Housing,” RISMedia (Oct. 25, 2011) and Capital Economics

© Copyright 2011 INFORMATION, INC. Bethesda, MD

Market Pulse Report: October 2011

Here's a little overview of what's going on in Orlando:

Main 

• Orlando home sales in September 2011 were down 13.48 percent over September 2010.
• Of the 2,054 sales in September, 790 “normal” sales accounted for 38.46 percent of all sales, while 533 bank-owned and 731 short sales made up 61.54 percent.
• The number of “normal” sales in September increased by 18.44 percent over September 2010, while short-sales increased 25.82 percent and foreclosures dropped 52.66 percent.
• The 9,369 homes pending closing in September of this year is an increase of 7.53 percent compared to the 8,713 pendings in September of last year.

Median Price

• The median price of all existing homes combined sold in September 2011, $115,000, is a 9.52 percent increase from the $105,000 median price recorded in September 2010.
• The median price for “normal” existing homes sold in September is $153,500, a decrease of 2.22 percent from the median price of “normal” existing homes in September 2010. The median price for bank-owned sales is $82,000 and the median price for short sales is $100,000.

Inventory

• There are currently 9,931 homes available for purchase through the MLS. The September 2011 inventory level is 39.29 percent lower than it was in September 2010.
• Orlando’s condo inventory is 50.16 percent lower than it was in September 2010.
• The current pace of sales translates into 4.83 months of inventory supply.

Other

• The Orlando affordability index increased to 250.11 percent in September. First-time homebuyer affordability in September increased to 177.87 percent.
• Homes of all types spent an average of 100 days on the market before coming under contract in September 2011, and the average home sold for 93.80 percent of its listing price.

Why homeownership matters…

To people

• Homeowners are happier and healthier and enjoy a greater feeling of control over their lives.

• Owning a home is one of the best ways to build long-term wealth. Historically, a homeowner’s net worth has ranged from 31 to 46 times that of a renter.

• Home owners are free to redecorate, renovate, and modify their homes as they wish.

• Most home owners enjoy stable housing costs — a fixed-rate mortgage payment might not change for 15 to 30 years while rent typically increases 3 percent a year.

• Homeowners can typically deduct mortgage interest and property taxes on their federal individual income tax return.

To communities

• People who own homes vote more, volunteer more and contribute more to their neighborhoods.

• Homeowners do not move as frequently as renters, providing more neighborhood stability. In turn, this stability helps reduce crime and supports neighborhood upkeep.

• Children of homeowners do better in school, stay in school longer, are more likely to participate in organized activities and spend less time in front of the television.

To the United States

• 67 percent of American households are owner-occupied. America is a nation of home owners.

• Homeowners pay 80 to 90 percent of federal individual income taxes, contributing to federal programs that benefit all Americans.

• Every home purchased pumps $60,000 into the economy for furniture, home improvements, and related items.

• Housing accounts for more than 15 percent of the national Gross Domestic Product, a key driver of our national economy.

Now is a good time to buy a house in Orlando because…

• Although many try to forecast when prices will hit bottom, the truth is that no one can predict the bottom of any market until it has already happened.

• Even within the Orlando market, different areas will “bottom” out at different times. Price fluctuations within each area of the Orlando market also differ.

• Buyers who hold off purchasing a home because they are waiting for prices to fall further may miss out on the home that they really want. The inventory of homes available for purchase, especially condos, is on a steady decline.

• Home prices have moderated, interest rates are at 40-year lows and the supply of homes for sale is plentiful. However, inventory has decreased by almost 60 percent since this time three years ago.

• Currently, about 58 percent of Orlando homes sales are foreclosures and short sales, which are typically priced much lower than “normal” homes. These types of homes sales continue to put downward pressure on the reported median or average sales price.

• Low interest rates, coupled with price declines, give trade-up buyers a unique opportunity to take advantage of market conditions. What an owner may lose on the sell side can be more than recovered on the buy side.

Quick Update on Mortgages...

FHA...new loan limits are set to go into effect 10/1/11.  The max loan limit for the tri-county area is being reduced from $353k to $274k. 

VA...as of 10/1/11, the VA up front funding fee is being reduced.  This means lower payments and savings for VA borrowers.  Remember, VA is still 0% down payment and NO monthly
mortgage insurance. (Note: VA clients, this is a HUGE advantage for you right now!)

USDA...as of 10/1/11, USDA loans will reduce their up front funding fee BUT now have monthly mortgage insurance.  Remember, USDA is also still 0% down payment.

Second home buyers...financing a second home purchase with just 10% down payment is now possible! Credit score of at least 620 is needed.



Information courtesy of my good friends at Security National Mortgage Company.