http://www.amerifirst.com/amerifirst-blog/topic/housing-market-trends Welcome to your Housing Market Update for real estate agents, with AmeriFirst Home Mortgage. I’m your host Dan Moyle and today is Friday, October 9th. This week in housing… are we headed for disaster? If you believe the headline from CNBC, we could well be headed into trouble. According to the news site, we’re poised for a bigger housing bubble than 2006, just before the market blew up. According to the reporter, first time home buyers are having a difficult time getting back into the housing market. That’s a pretty broad stroke to take for a few million people across 50 states. As a real estate agent you’re well aware: it all depends on the local market. We hear so much about national numbers and yet these coastal and major metro markets miss the mark when it comes to many of our communities. According to the article, markets like Phoenix, Las Vegas and Atlanta aren’t first-time-buyer friendly. Here’s the thing: no kidding. Major cities hit hard by the housing bubble, where foreign and cash-focused investors flocked to, will see prices soar as demand is high and supply is low. However, that doesn’t tell the story of markets in Michigan, Indiana, Ohio, Tennessee … “Middle America.” Let’s look at a few points made in the meat of this article: Even with interest rates today considerably lower than they were during the housing boom, housing today is far more expensive. Buyers can't just pay interest on the loan (which is a bad idea to begin with), they have to pay principal as well (this is basic economics – you have to pay back your debt. That doesn’t mean it’s not affordable). They have to put at least 3 percent down (Not true. USDA Rural Development and VA Loans finance 100%), and if they are using that low a down payment, they have to pay mortgage insurance. The income needed to qualify for a loan today is also far higher than it was then (Not far higher, but merely in line with good, solid budgeting. You shouldn’t borrow more than you can pay back; you need to take into account living expenses). One industry expert says: “Four years in, I would think the housing market would be further along. I think it means we're going to have a longer, slower recover.” Slow and steady is a good thing. By the way, that expert was a “luxury home builder.” Many home buyers, regular folks like you and me, aren’t hiring a luxury home builder. We’re looking for regular housing. On the other side of the coin, real estate analyst John Burns calls these claims "ridiculous." He says you cannot compare affordability today to the heady days of the housing boom when anyone could get a loan with no money down and artificial — now illegal — teaser rates. Burns called that time frame "an awkward, unusual period that is not coming back. He also says 90 percent of the nation's local markets are "affordable" when home prices are weighed against income. I asked the co-founders of AmeriFirst Home Mortgage what they thought about the claims and where the market is today. President Mark A Jones agreed with the analyst John Burns, particularly about the teaser rates. He says when you look at the “Chicago Case Shiller Index” housing price trend line (on your screen now), you will see we are still way below the long term trend line. We have room to grow responsibly and purposefully. The spike of 2006 - the bubble - is also clearly evident. AmeriFirst CEO David Gahm shared with me his thought as well. He says you certainly have to recognize the market risks, however, once confidence returns to the mentality of the buying process, that real estate is a good investment, the momentum offered by the new generation of buyers will bring a demand dynamic yet to be determined… and that mentality is building when you look at demand across markets. Perhaps the best statement in the article: But as with everything in real estate, affordability often has to do with location. What do you see as a real estate agent? Do you think we’re headed for a bubble? Do you see the market growing just enough or too fast? Leave us your comments below. And that’s your housing market update for real estate agents, with AmeriFirst Home Mortgage, for Friday, October 9th... Subscribe to our channel to get your weekly updates. I’m Dan Moyle, and I’ll see you next Friday. Reference link: http://www.cnbc.com/2015/10/06/housing-today-a-bubble-larger-than-2006.html AmeriFirst Home Mortgage 950 Trade Centre Way, Suite 400 Kalamazoo, Michigan 49002 AmeriFirst Home Mortgage is a home buyer’s resource center and community mortgage banker. We focus on educating homeowners and home buyers in the details of the housing market and more. AmeriFirst Home Mortgage is a division of AmeriFirst Financial NMLS ID 110139 | Equal Housing Lender

• published: 09 Oct 2015
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