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How to Get a Better Perspective on Affordability

How to Get a Better Perspective on Affordability | Simplifying The Market

Headlines spotlight the fact that buying a home is less affordable today than it was at any other time in more than a decade. Those headlines are accurate.

Understandably, buying a home is more expensive now than immediately following one of the worst housing crashes in American history. Over the past decade, the market was flooded with distressed properties (foreclosures and short sales) selling at 10-50% discounts. There were so many that this lowered the prices of non-distressed homes in the same neighborhoods. As a result, mortgage rates were kept low to help the economy.

Prices have since recovered. Mortgage rates have increased as the economy has gained strength. This has impacted housing affordability. However, it’s necessary to give historical context to the subject of affordability.

Two weeks ago, CoreLogic reported on what they call the “typical mortgage payment”. As they explain:

“One way to measure the impact of inflation, mortgage rates and home prices on affordability over time is to use what we call the ‘typical mortgage payment.’ It’s a mortgage-rate-adjusted monthly payment based on each month’s U.S. median home sale price. It is calculated using Freddie Mac’s average rate on a 30-year fixed-rate mortgage with a 20 percent down payment…

The typical mortgage payment is a good proxy for affordability because it shows the monthly amount that a borrower would have to qualify for to get a mortgage to buy the median-priced U.S. home…

When adjusted for inflation, the typical mortgage payment puts homebuyers’ current costs in the proper historical context.”

Here is a graph showing the results of CoreLogic’s research:

How to Get a Better Perspective on Affordability | Simplifying The Market

As the graph indicates, the most recent calculation remained 28% below the all-time peak of $1,275 in June 2006. That’s because the average mortgage rate at that time was 6.68%. As seen in the graph, both today’s typical payment and CoreLogic’s projection for the end of the year are less than it was in January 2000.

Bottom Line

Even though home prices are appreciating at a slower rate, home affordability will likely continue to slide. However, this does not mean that buying a house is an unattainable goal in most markets. It is still less expensive today than it was prior to the housing bubble and crash.

The KonMari Method: Helping You Prep Your House For Sale

The KonMari Method: Helping You Prep Your House For Sale | Simplifying The Market

One of the biggest challenges sellers face when listing their house is decluttering. Cleaning out some of the more personal decorating choices allows buyers to imagine themselves living in the house.

Those planning to sell soon are in luck! Marie Kondo, the inventor of the KonMari Method of Tidying Up, has gained popularity with her new Netflix series. She gives some great tips for sorting through years of accumulated possessions that we all collect in our homes.

“The KonMari Method™ encourages tidying by category – not by location – beginning with clothes, then moving on to books, papers, komono (miscellaneous items), and, finally, sentimental items. Keep only those things that speak to the heart, and discard items that no longer spark joy. Thank them for their service – then let them go.”

When you subjectively look at all of your belongings, you can sort through the ones that mean the most to you. Not only will you increase space for more joy-bringing items in your new home, but you will also have a much easier time packing remaining belongings!

“Remember, tidying up isn’t about getting rid of stuff. It is about creating an environment that sparks joy and improves your quality of life.”

When selling your house, first impressions matter! Before you or your agent schedule a photographer to take photos for your listing, make sure to tour your home with fresh eyes. Look for any imperfections that a buyer might notice.

When you sort through your more sentimental items, consider packing them away to ensure that you know where they all are. That way, they are safe during open houses and showing appointments. This will also cut down on the amount of packing you need to do right before you move!

Bottom Line

Whether you are selling your house to move up to a larger one, downsizing, or moving in with family, only bring the items that truly spark joy for you. This will not only help cut down on the items you move, but also ensures that you’re off to a great start in your new home!

office space

Restoration Clauses

Five years ago, you opened the doors to your business.  You did everything right and now it is time to expand! Over the years you made improvements to your leased space as you saw fit. You added carpeting, walls, offices and conference rooms. You have your new lease signed, movers are ready and just because you like to be on top of things you even gave your landlord 60 days’ notice.  On your last day as a tenant, your landlord stops by to wish you well, and hands you a notice that you have violated the Restoration Clause in your lease.  If you do not repair the space back to the way it looked five years ago, you will be sued.  Thanks for being a perfect tenant!

The excitement of opening your own business is tangible.  Selecting your space, envisioning how the office will look, how happy your clients will be and how far you have come.  Most real estate agents can schedule showings and do the research you require.  However, is your agent comfortable in understanding and negotiating a commercial lease? Were you or the agent aware of the restoration clause?  Why didn’t your agent request that it be removed prior to you signing your lease five years ago?  More importantly, why were you surprised by this?

At IMT Realty, we have over 25 years of commercial lease experience.  We began in Manhattan working on 5th Avenue and were honored to be part of the implementation team during the sale of the World Trade Centers in 2001.  Our team is dedicated to act in your best interest and ask all the right questions.  We ensure you keep you informed every step of the way, and never leave you surprised.


If you have questions or would like a free lease abstract as a tenant or landlord please contact Tim at IMT Realty.  

Where Integrity Meets the Transaction.

NET Operating Income

Net Operating Income

IMT Commercial Realty & Property Management

“Protecting your Investment with Integrity”

Net Operating Income

Every investor would like to capitalize on the next best opportunity that hits the market. Not understanding the Net Operating Income (NOI) of the property can quickly turn what seems to be a great opportunity into a poor investment. Let IMT Realty show you how to protect your money so you can buy your next property with peace of mind!

 

NOI is calculated simply by subtracting the operating expenses from the gross operating income. Most investors need to make quick decisions and cannot find the time to sit down and go over these numbers. We have a standardized process that gives you accurate information which allows our owners to make confident buying decisions.


Before jumping into the process alone, ask yourself 3 questions:

1. Do you understand all the lease provisions for the leases currently in place?

2. Are you aware of all the income potential about the property?

3. Have you accounted for all the expenses?  

If you are unsure, or questions come to mind, please contact Tim at IMT Realty.  Where Integrity Meets the Transaction.