Millennials Are Increasing the Demand for Condominiums
When deciding to buy a home, people are presented with many different options. The type of home you buy depends on your needs, budget, and in many cases, the desired maintenance level. For many millennials, their choice has been buying a condominium!
According to CoreLogic,
“Last year about 43% of all condo home-purchase mortgage applications were submitted by FTHBs… Similarly, the data show condos were more popular with young homebuyers and empty nesters. For instance, 21% of all condo home-purchase mortgage applications were submitted by buyers aged 18 to 30, compared with just 17% of all single-family home-purchase mortgage applications by the same group in 2018.”
With home prices increasing year-over-year, it makes sense millennials are buying condos instead of a single-family house. As a result, the demand for this type of home has been increasing.
As this graph explains,
“The younger millennials are the largest cohort and are likely to drive much of the condo demand in the coming years”.
Bottom Line
If you are a millennial considering buying a home, understand that there are many options available. You may find yourself in a condominium as your first home. If you would like to determine which type of home best fits your needs, let’s get together to evaluate your options! Give us a call today at 734-761-3060 or info@condohotline.com!
Guidance and Support Are Key When Buying Your First Condo or Home
In June, the number of first-time homebuyers accounted for 35% of the existing sales, a trend that’s been building steadily throughout the year. According to the National Association of Realtors (NAR):
“The share of first-time buyers increased in March through June—right into the heart of the pandemic period and the surge in unemployment—and is now trending higher than the 29% to 32% average in past years since 2012.” (See graph below):
Why the rise in first-time buying?
NAR continues to say:
“The major factor is, arguably, low mortgage rates. As of the week ended July 16, the 30-year fixed mortgage rate dropped to 2.98%. With rates so low that are locked in under a 30-year mortgage, the typical mortgage payment, estimated at $1,036, has fallen below the median rent, at $1,045. For potential home buyers who were thinking of purchasing a home anyway before the pandemic outbreak and who are likely to remain employed, the low mortgage rate may be the clincher.”
Clearly, historically low mortgage rates are encouraging many to buy. With the average mortgage payment now estimated at a lower monthly cost than renting, it’s a great time for first-time homebuyers to enter the market. According to the Q2 2020 Housing Trends Report from the National Association of Homebuilders (NAHB):
“Eighty-four percent of Gen Z’s planning to buy a home are first timers, compared to 68% of Millennials, 52% of Gen X’s, and 21% of Boomers. Looking at results by region shows that over 60% of prospective buyers in the Northeast and South are buying a home for the first time. The share is above 55% in the Midwest and West.”
There are, however, challenges for first-time buyers. A recent survey conducted by NeighborWorks America also notes that understanding the buying process may be the most significant barrier for many hopeful homeowners:
“Homeownership is a particular challenge for many, despite high levels of interest. Americans believe there are many benefits to homeownership and half of non-owners will seek information about the process in the next few years…a large share of non-owners say the process is too challenging and only a minority know where to find advice if they wanted it. And although many would seek the guidance of community and non-profit programs, only one in three non-owners are aware of such services.”
If you’re among the first-time buyers who feel the process is complicated, you’re not alone. If you’re not sure where to begin or you simply want help in figuring out how to save for a home or condo, finding a trusted real estate advisor to work with is a critical step toward your success. A real estate professional can help you understand the process, review your current situation, and guide you with a plan to help you to feel confident when buying your first condo.
Bottom Line
If you’re interested in purchasing a condo or home and need help getting started, let’s connect today so you can take advantage of the support available to guide you through each step of the way. Contact us today at The Bouma Group, Realtors at 734-761-3060 or info@condohotline.com.
Ann Arbor Condo Report – June 2020
Listed and Sold Inventory Remain Balanced
With the start of summer, the inventory for Ann Arbor condos have maintained their balance. Last June, 68 condos were both listed and sold, and although there was a 14.7% decline on the whole this June, 58 condos were listed and were also sold. The average listing price has increased 6% from $316,090 to $335,158. And as for the average selling price, it experienced a decline, $298,525 versus $272,911 now – an 8.6% difference. Unfortunately for sellers, the average days on market has drastically increased by 112% to 53 days.
Examining the year-to-date statistics, we see an overall decline in all areas. The amount of newly added listings has dropped by 27.8% from 421 condos to 304 entered so far this year. And for these condos the ALP is $326,550, a 4.3% decrease from $341,102 previously. A total of 168 condos have been sold thus far, and compared to the 293 last year at this time, this is a significant 37.5% decline. Thankfully, the ASP has seen a lesser difference of 7.7%, from $291,760 to $269,337.
Although the future of the condo market may seem uncertain, let the experts with The Bouma Group help with all of your questions and concerns. You can contact us at (888)581-6923 or email info@condohotline.com. Learn more about Ann Arbor condos here!
What Are the Experts Saying About Future Condo Prices?
A worldwide pandemic and an economic recession have had a tremendous effect on the nation. The uncertainty brought about by both has made predicting consumer behavior nearly impossible. For that reason, forecasting prices has become extremely difficult.
Normally, there’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Mortgage applications to buy a home or condo just rose to the highest level in 11 years while inventory of homes and condos for sale is at (or near) an all-time low. That would usually indicate strong appreciation for values as we move throughout the year.
Some experts, however, are not convinced the current rush of purchasers is sustainable. Ralph McLaughlin, Chief Economist at Haus, explained in their June 2020 Hausing Market Forecast why there is concern:
“The upswing that we’ll see this summer is a result of pent-up demand from homebuyers and supply-in-progress from homebuilders that has simply been pushed off a few months. However, after this pent-up demand goes away, the true economic scarring due to the pandemic will begin to affect the housing market as the tide of pent-up demand goes out.”
The virus and other challenges currently impacting the industry have created a wide range of thoughts regarding the future of home prices. Here’s a list of analysts and their projections, from the lowest depreciation to the highest appreciation:
- CoreLogic: Year-Over-Year decline of -1.5%
- Haus: Year-Over-Year decline of -1%
- Zillow: Year-Over-Year change is forecasted to bottom out at -0.7%.
- Home Price Expectation Survey: Decline of -0.3% in 2020
- Fannie Mae: Increase of 0.4% in 2020
- Freddie Mac: Increase of 2.3% in 2020
- Zelman & Associates: Increase of 3.0% in 2020
- National Association of Realtors: Increase of 3.8% in 2020
- Mortgage Bankers Association: Increase of 4.0% in 2020
We can garner two important points from this list:
- There is no real consensus among the experts.
- No one projects prices to crash like they did in 2008.
Bottom Line
Whether you’re thinking of buying or selling a condo or house, know that prices will not change dramatically this year, even with all of the uncertainty we’ve faced in 2020. If you’d like more information or to learn about your specific condo or home value, contact us, the Ann Arbor Condo specialists today at 734-761-3060 or info@condohotline.com.
Condo Buying Has Gone Virtual!
Today’s everyday reality is pretty different than it looked just a few weeks ago. We’re learning how to do a lot of things in new ways, from how we work remotely to how we engage with our friends and neighbors. Almost everything right now is shifting to a virtual format. One of the big changes we’re adapting to is the revisions to the common real estate transaction, which all vary by state and locality. Technology, however, is making it possible for many of us to continue on the quest for homeownership, an essential need for all.
Here’s a look at some of the elements of the process that are changing (at least in the near-term), due to stay-at-home orders and social distancing, and what you may need to know about each one if you’re thinking of buying or selling a home sooner rather than later. (more…)
Ann Arbor Condo Report – February 2020
Lower Prices for Ann Arbor Complexes
In the month of February, Ann Arbor condo units experienced lower prices overall. The average listing price decreased slightly by 3% from $361,306 to $350,632. More listings were entered this past month though, last February had 43 while most recently 52 condos were added, a 21% increase. As for sold condos, 31 were sold which is an 8.8% decrease compared to the 34 sold previously. There has been a 4.3% decline in the average sale price, from $294,208 to $281,585 currently. Condo sellers will be excited with the 33.8% decrease in the average days on the market to 43 days.
As for the year-to-date statistics, there has been a considerable increase in the amount of listings from 81 to 110 units, a 35.8% change. The ALP overal is $363,710, risen slightly by 4.3% from last year’s ALP of $348,707. So far this year 62 condos have been sold, and in comparison to the 70 condos prior this is an 11.4% decline. The ASP has decreased by 6.1% from $298,639 to $280,296 cumulatively now.
For all of your condo questions and quandries, contact the condo experts with The Bouma Group at 734-761-3060 or email info@condohotline.com. Check back here for more updated information on Ann Arbor condos!
Condo Buying Terminology: A Cheat Sheet
Buying a condo or home shouldn’t be rocket science. You find the perfect place, make an offer to the seller, pay a couple of fees, and bam! You just bought a home.
However, buying a condo actually has a lot of moving parts which include a number of funny real estate terms you’ve probably never heard before. Are Realtors and real estate agents even speaking English anymore?
To help you out, we’ve come up with a cheat sheet so you’ll know exactly what we are talking about when we explain the buying process.
Pre-Approval
If you meet with an agent before you begin looking for condos, they’ll likely recommend you get pre-approved for a mortgage. Mortgage pre-approval is the best first step, because it essentially sets your budget for you.
Pre-approval involves sitting down with a lender to discuss your financial portfolio. This includes your credit score, borrowing history, outstanding debts, annual income, and any assets you have. After reviewing all of this, the lender gives you an exact number: that’s how much the bank is willing to lend you.
Not only is your budget set, sellers will take you more seriously because they know you can qualify for enough loan to support your offer. (more…)
Saving up for a New Home or Condo? Here Are All the Costs You Need to Know
Once you’ve found the perfect home or condo and secured the loan, all that’s left to do is start chipping away at those mortgage payments…right? In actuality, there are a handful of other, often-overlooked expenses that come with buying a home, but as long as you know what you’re getting into, they’re plenty manageable.
Take a look at our comprehensive list of all the costs you need to know when buying a home or condo.
One-Time Payments & Closing Cost
Ann Arbor Condominium Report – September 2019
Listing Prices Remain Consistent
Overall, there has not been much variance in the statistics for Ann Arbor condos compared to the 2018 numbers. In the month of September, listing prices declined minimally from $322,848 last year to $315,491 currently. 62 condos were listed for sale and this is a 19.2% increase compared to the 52 sold last September. There was a 12% decrease in the amount of sold listings this past month with 44 units being sold compared to the 50 that were sold previously. The average sale price was $285,726 versus the ASP of $233,240 in September 2018, a 22.5% decline. Unfortunately for sellers, the average days on the market has drastically risen to 64 days, which is more than one and a half times longer than last September’s 24 days.
Looking at the year-to-date statistics, we can see that most of the numbers have remained similar to before. A total of 624 listings have been entered thus far, and this is a minimal decline from the 629 last year at this time. The average listing price has decreased 4.7% to $330,939 from $347,334. Despite the recent decline in sales this September, the total amount of sold condos has gone from 427 to 451, a 5.6% rise. As for the ASP, there has only been a slight decrease in prices, $288,938 versus $283,290.
The Bouma Group is here to help with all of your condo needs, you can contact the experts at 734-761-3060 or via email info@condohotline.com. Stay tuned for more updated information on Ann Arbor Condos!
Mortgage 101: What To Know Before You Apply
Everybody loves talking about mortgages. They’re fun, easy to understand, and a great icebreaker, right?….Wrong. Thanks to their lengthy process, technical jargon, and confusing options, mortgages have a bit of an intimidating reputation—but it doesn’t have to be that way!
If you’re in the process of buying a new condo and dreading the mortgage application process, here’s what you need to know to keep things running smoothly.
Know How Much You Can Spend
If you’re feeling antsy about getting started and want a general idea of how much loan you might qualify for, consider the 28/36 rule, or the Debt-to-Income ratio—AKA what most lenders use to help calculate your mortgage.
Essentially, the 28/36 rule means that your monthly mortgage payment shouldn’t be more than 28% of your gross income. Additionally, your outstanding debts—like mortgage, car loans, student loans—shouldn’t account for more than 36% of your gross income.
Get Your Finances in Order
Not seeing the numbers you were hoping for after calculating your Debt-to-Income ratio? Then, hopefully, you’ve given yourself a little time to shift things in your favor. Paying off loans, improving your credit score, avoiding big purchases—these will all help you change those numbers.
Of course, completing those tasks is a little harder to do in practice than in theory, so you may have to take a look at your budget and see where you can cut out some extras—at least temporarily!
What You’ll Need to Apply
In the weeks before you plan on applying for a mortgage, you should start collecting all of the documents you need. Since a lender will be telling you exactly how much money they’re willing to loan, they’ll need a comprehensive understanding of your finances beforehand. Start gathering things like:
- W2s/tax returns
- Photo ID
- Your two most recent pay stubs
- Current and prior addresses
- Asset information (retirement funds, 401(k), stocks and bonds, other investments)
- Gift letters
Depending on the lender you choose, you may need additional documents, so consider calling in to double-check beforehand.
Find the Right Mortgage
Once it’s time to start thinking more concretely about applying for a mortgage, you have several options to consider. While all the mortgage options out there could easily fill a whole blog post on their own, here’s a quick rundown to give you a general idea:
- Conventional/Fixed-rate: The interest rate of a fixed-rate loan won’t change over time, making it a popular choice for its predictability. Conventional loans typically require a 20% down payment or mortgage insurance for smaller down payments.
- Adjustable-rate: The interest rate of adjustable-rate mortgage will fluctuate over time, sometimes lower than fixed-rate, sometimes higher. There is a cap in place so the rate doesn’t get too out of control, but ARMs are typically more popular with those who plan to refinance.
- FHA: If you are struggling to come up with a down payment, you may have options with an FHA mortgage. Provided by the Federal Housing Administration, these loans come with a low down payment requirement and built-in mortgage insurance.
- USDA: Live in a rural area? Then check out your USDA eligibility! A surprising amount of areas qualify for USDA loans, even if you aren’t living in the countryside. Plus, USDA loans don’t require a down payment and offer lower insurance premiums.
These aren’t the only options you’ll have, just the most common. If none of these sound right or you aren’t sure which to choose, just ask your lender!
Choose the Right Lender
When it comes time to decide who to work with, you’ll have to do your research. Each lender is different, meaning they’ll likely offer you different rates, charges, and loan options.
Luckily, we’ve been working in real estate around the area for years, so we know exactly which lenders are right for which buyers. If you need a few suggestions before you kick off your search, just let us know!
Still Have Questions?
That’s okay—we get it. Applying for mortgage is confusing and challenging, especially if it’s your first time. If you have any questions about the process, we’re here to help, give us a call at The Bouma Group, Realtors at 734-761-3060 or info@condohotline.com.
Ready to start looking at a few homes in your price range? We can help with that, too! Check out our specialized search tool to narrow down your options, and give us a call to start seeing a few in person! Start your Search here!