The state of homeownership in this country is an interesting one right now. With home prices rising at a rate that hasn’t been seen since the boom several years ago, demand is strong while supply is lacking. The market would appear to be healthy, rebounding well, however, there’s a hitch; for a prospective buyer, rising prices isn’t the only concern. As a result of recent mortgage regulation and reforms, lenders are being extra tight on qualification standards, leaving many interested buyers unable to secure loans.
So who is buying? Investors. Large investors and small ones are sweeping in and swarming the housing market this year. With cash offers and deeper pockets, investors are winning out, many of whom are buying homes, fixing them up, and renting them, with a focus on long-term appreciation. There has been an increase in rental properties, and strong competition among investors is basically cutting the average buyer out of the game.
However, with prices on the rise quickly, finding homes on the cheap is proving to be more and more difficult for investors. The number of foreclosures on the market has dropped significantly, and investors able to pay cash grab those that do come to market. As a result of these trends, American homeownership is on the decline. The Census Bureau shows that the country’s homeownership rate in the first quarter of 2013 declined 0.4% from the previous quarter and the same quarter in 2012. Ultimately, analysts are most wary of the quick pace of rising home prices. We could be headed toward another bubble if prices continue to rise for another 6 months, says Dean Baker, co-director of the Center for Economic and Policy Research.
So, that’s the state of homeownship in this country; have you taken stock of the state of your family’s homeownership? Are you in a healthy position with your mortgage payments or are you underwater, owing more on your home than the fair market value? If you find yourself in this position, consider calling us at McFarlin LLP. We are here to help.
Timothy McFarlin, McFarlin LLP