Q: What kind of down payment assistance programs are available to first-time homebuyers?

Who doesn’t love free money—especially when it can help you to afford your first home?

Saving up for a down payment on your first home isn’t fun. About a quarter of first-time buyers rated coming up with that money as one of the most difficult steps of the homebuying process, according to the National Association of Realtors®. And it’s not getting any easier. Inflation and rising rents are whittling away at paychecks, student loan and car payments keep coming due, and there always seems to be some sort of emergency you have to throw money at.

That’s where down payment assistance programs can help.

There are at least 2,000 federal, state, regional, and local programs available across the nation. Some employers even offer them. Many of these are little-known programs typically offered by government agencies, nonprofit organizations, and private lenders and can put anywhere from a few hundred to tens of thousands of dollars into the hands of homebuyers.

That kind of cash can help turn someone’s dream of homeownership into reality.

Some buyers can qualify for these programs based solely on their income. Others might be able to secure assistance depending on their professions, military service, racial backgrounds, disabilities, and where they hope to purchase their homes, among other factors.

Homebuyers can search for down payment assistance programs on Realtor.com®. They can also check out their state’s Department of Housing website to see what sort of help is available.

The assistance can come in the form of grants, which are fully forgiven when you close on your home; forgivable loans, where you can keep the money unless you break the terms of the loan; and deferred-payment loans, which you repay at the end of your loan or if you violate the stipulations of your loan. There are also loans that you pay back every month, some with interest rates as low as 0%.

However, there is no such thing as a free lunch—or a no-strings-attached down payment in this case.

Some of the more common stipulations are that the buyers will undergo housing counseling or other education program in order to receive the funds. Many require recipients to make these properties their primary residences, sometimes for a set period of time—or they may have to pay back a portion of the assistance they received.

So don’t skip reading the fine print on the down payment applications.

Also, buyers who receive assistance still need to qualify for a mortgage. Lenders want to see steady incomes, strong credit scores, and relatively low debt.

First-time buyers might also want to consider low or even no-down-payment mortgages. Many folks believe that they must put down at least 20%, but that’s a myth. If you put down that much, you can avoid paying private mortgage insurance every month, which is great. But 20% of the median-priced home of $400,000 in December was $80,000. That’s a lot of money. And it doesn’t include closing costs, which can set buyers back an additional 2% to 6% of their loan amounts, plus repairs, furniture, and an emergency fund.

This is why the typical first-time buyer kicked in much less—just 6% of the purchase price of their home last year, according to NAR data.

Active military personnel and veterans as well as those purchasing homes in more rural areas might be eligible for 0% down loans through the U.S. Department of Veterans Affairs or the USDA Rural Home Loan Program.

Fannie Mae and Freddie Mac offer several programs to lower-income homebuyers that can require as little as 3% down. The Federal Housing Administration offers loans for first-time buyers with down payments as low as 3.5%.

With fewer buyers in the market, sellers are more likely to accept offers from buyers with lower down payments. (At the height of the COVID-19 pandemic, all-cash offers and sizable down payments often won out as many sellers assumed, sometimes erroneously, that buyers who had more cash to put down were on better financial footing.)

There are risks associated with these loans, though. The housing market has been cooling rapidly as higher mortgage interest rates have limited how much buyers can pay for homes. If borrowers get a 3% down loan and home prices in their market fall by 5%, they might find themselves underwater on their mortgage, owing more than their home is worth.

That’s usually not a big problem if you plan to stay in your home for a while as long as you can continue to make your mortgage payments. Home prices typically rise over time even if they fall in the short term. But if you need to sell before the housing market bounces back, you could wind up losing money.

So if you’re dreaming of homeownership but having a hard time saving up for a down payment, it doesn’t hurt to see what sort of assistance might be available to you.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

If you dread opening up your electric bill these days, you’re not alone. Between inflation, bitterly cold weather, the war in Ukraine, and other factors, energy prices are surging — and homeowners and renters are starting to feel it in their wallets.

Most, if not all, of these recommendations have the added benefit of making your home more energy efficient, which means you’ll be lowering your environmental impact while also saving money. A win-win!

Turn on Your Ceiling Fans

Most ceiling fans have a small switch that changes the direction of the fan blades. In the winter, spend a few seconds fiddling with the ceiling fans in your house so the blades rotate clockwise, suggests Kelly Moye, a real estate agent in Colorado. This simple tweak will help make each room feel warmer, thus saving your furnace or heater from having to work as hard.

“Heat rises and when the ceiling fans go clockwise, they push the heat down instead of letting it settle up into the ceiling,” she says.

Change Your Furnace Filter

You can help your furnace run more efficiently — which will save you money in the long run — by changing the filter regularly, says Moye. You can find lots of YouTube videos showing you exactly how to do this, and you can typically find filters at home improvement stores starting at around $10 apiece.

“It needs to be changed every month in the winter,” she says. “When there is proper airflow through the furnace, it doesn’t have to work as hard to heat the house. Most people forget that they need to be changed as often as they do.”

Change Your Furnace Filter

You can help your furnace run more efficiently — which will save you money in the long run — by changing the filter regularly, says Moye. You can find lots of YouTube videos showing you exactly how to do this, and you can typically find filters at home improvement stores starting at around $10 apiece.

“It needs to be changed every month in the winter,” she says. “When there is proper airflow through the furnace, it doesn’t have to work as hard to heat the house. Most people forget that they need to be changed as often as they do.”

“Installing a smart thermostat can save you a lot of money and also make your home more comfortable,” he says. “These are perfect for people who are away from home for long periods of time.” 

Get an Efficiency Audit

Do some research online and look for local energy companies or sustainability nonprofits that offer free or cheap energy audits, suggests Dj Olhausen, a real estate agent in San Diego. When you schedule one, a trained professional will come to your house and evaluate its energy efficiency from top to bottom, paying special attention to insulation, air leaks, appliances, windows, and other elements.

The U.S. Department of Energy also offers tips for running a DIY energy audit on your own house, which is totally free.

“Double-check if windows are air sealed to avoid wasting air conditioning or heat,” suggests real estate agent Augusto Bittencourt.

Use Smaller, Localized Heating and Cooling Systems

Running the air conditioner or heater to adjust the temperature throughout your home can get expensive. If you spend a lot of time in one room — say, a home office — consider investing in a portable air conditioner unit or a space heater to help keep that room comfortable.

“These are great ways to control the climate of an individual room, rather than wasting electricity on a whole house,” says Olhausen.

Consider Solar Panels and Other Big Upgrades

If you can afford it, consider investing in solar panels, energy-efficient appliances, newer windows, upgraded siding, and other pieces of your home’s infrastructure, suggests real estate broker Mihal Gartenberg. 

“Homeowners must consider the cost/benefit before embarking on such updates,” she says. 

Spending money now should pay off later if you eventually sell your house. You can also sometimes find rebates or tax credits for these types of updates, with a little digging. Also keep in mind that the new federal infrastructure bill, signed into law by President Joe Biden in August, includes lots of money for home upgrades, so keep an eye out for more details in the near future. 

Even if big changes like these aren’t in the budget, you can still make smaller, more affordable swaps. Bittencourt recommends swapping in LED bulbs, which you can change out one lamp at a time if you need to.

And real estate agent Marie Bromberg recommends adding solar-powered lights to the garden and stashing solar power banks around your house to recharge your laptop. There are also lots of other solar-powered gadgets and devices, too.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

A little optimism can help propel you when things get difficult in the homebuying market. But if you’re feeling too good about your chances of buying this year — good in ways simply not justified given the current economic conditions — you could find yourself disappointed, at best, and unsuccessful or overextended, at worst. 

About 28 million Americans plan on buying a home in the next 12 months, according to NerdWallet’s recent annual Home Buyer Report. Typically, they’re hoping to spend $200,000. This will be extremely difficult when the national median sales price of all homes, including condos, is $342,000, according to the latest data from Zillow. 

Home prices have skyrocketed over the past two years. The housing market was overrun with buyers competing for too few available homes; pair that with low mortgage rates, and prices were driven skyward. They’ve come down a bit since their peak of $363,000 in June 2022, according to the Zillow data, but are unlikely to sink significantly in a broad-based fashion in 2023.

So, where will buyers find homes selling for $200,000? Not likely in the markets they’re hoping; high-demand markets command higher prices, and that’s always the case. And this analysis of recent sales prices and a generous forecast of where prices could fall in the coming year find buyers will be hard up for that kind of bargain in most areas across the nation.

Buying at current prices

Even if home prices stop growing this year, a $200,000 budget won’t go far in most markets. In fact, median sales prices haven’t been that low since early 2016. Of the 614 areas with available October 2022 Zillow pricing data, just 204 have median sales prices of $200,000 or lower. Most are smaller towns, as the dataset includes metropolitan and other areas with populations as low as 10,000 people. The largest of the metro areas with a sub-$200,000 sale price is Dayton, Ohio, with a population of 807,000. 

Among the 50 largest metro areas, the average, typical price for this past October (the most recent data available) was $419,000, according to the Zillow data. Buyers who hope to purchase in these more populated areas should brace themselves for sales prices far above $200,000. These geographic areas are not only city centers, but generally include surrounding neighborhoods and even suburbs, so don’t assume a commute will knock six figures off the prices you see.

Even if prices fall, they won’t likely fall far

But just for fun, what if prices do fall in a measurable way? Growth in sales prices was fast and painful for buyers over the past few years, and those high prices aren’t sustainable in some markets. The most likely scenario in 2023 is that prices will come down slightly in some areas but stabilize in others. They’re unlikely to plummet in a broad-based fashion. 

Even if prices gave up half of their recent growth, few would be within that median buyers’ budget of $200,000. 

From 2020 through October 2022, the most recent month for which data is available, sales prices grew 30% across the nation and as much as 50% or more in some metropolitan areas. In Austin, Texas, for example, sales prices rose 51%, from $347,000 in 2020, on average, to $525,000 in 2022. In Phoenix, AZ, they rose 48% during that period, from $312,000 to $462,000. 

But what if all markets nationally gave up half of their steep 2020-22 growth? Still, fewer than half would have homes priced below the $200,000 threshold. Among the 50 most populous markets, just 6% would fall below $200,000. And the typical national sales price would still be $294,000.

Click here to view a table with current median sales prices and 2020-2022 growth rates in more than 600 areas across the country. 

Glimmers of hope for 2023 buyers 

This isn’t all to dash dreams of buying in the next year. If the history of buying and selling homes in the United States has taught us anything, it’s that millions will be successful, even in tough economic times. But hopefuls should be more realistic than optimistic. Knowing what headwinds you might face can help anchor your expectations and drive the kind of planning that ensures you won’t get in over your head. 

Consult with a local real estate agent to learn a realistic budget for the area where you hope to buy. Also, use a home affordability calculator to understand better how a mortgage payment will fit in with your other financial obligations.  

Some good news for 2023: Sellers no longer have sole control; the market is more balanced than it has been, mainly because demand has come down due to higher mortgage rates. This means there’s more room for negotiations on things such as price, closing date, inspections and so on. But buyers will need to remain flexible, especially if their budget is at the lower end. A few hundred thousand may not go far enough in the hottest markets, but careful hunting in other areas and a willingness to forgo some “must haves” on your wishlist can make homeownership more likely a reality than a dream. 

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

67% of Americans say a housing market crash is imminent in the next three years.

With all the talk in the media lately about shifts in the housing market, it makes sense why so many people feel this way. But there’s good news. Current data shows today’s market is nothing like it was before the housing crash in 2008.

Back Then, Mortgage Standards Were Less Strict

During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance an existing one.

As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.

The graph below uses data from the Mortgage Bankers Association (MBA) to help tell this story. In this index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is.

This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards have helped prevent a situation that could lead to a wave of foreclosures like the last time.

Foreclosure Volume Has Declined a Lot Since the Crash

Another difference is the number of homeowners that were facing foreclosure when the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM to show the difference between last time and now:

So even as foreclosures tick up, the total number is still very low. And on top of that, most experts don’t expect foreclosures to go up drastically like they did following the crash in 2008. Bill McBride, Founder of Calculated Risk, explains the impact a large increase in foreclosures had on home prices back then – and how that’s unlikely this time.

“The bottom line is there will be an increase in foreclosures over the next year (from record level lows), but there will not be a huge wave of distressed sales as happened following the housing bubble. The distressed sales during the housing bust led to cascading price declines, and that will not happen this time.”

The Supply of Homes for Sale Today Is More Limited

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Supply has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to years of underbuilding homes.

The graph below uses data from the National Association of Realtors (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just 2.7-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for home prices to come crashing down like they did last time, even though some overheated markets may experience slight declines.

Bottom Line

If recent headlines have you worried we’re headed for another housing crash, the data above should help ease those fears. Expert insights and the most current data clearly show that today’s market is nothing like it was last time.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

Extra stuff isn’t just messy. It could be holding you back from living your best life. Here’s what you need to know

Envious of those neat, tidy spaces and empty shelves that fill home decor blogs and websites? Blank space can be beautiful, and popular books promise strategies to shed extra stuff. But is minimalism livable? Some research suggests that de-cluttering can have as much of an effect on your well-being as it does on your physical space.

It’s not just in your head: Extra stuff is stressful

If the constant stream of things to pick up around your home leaves you feeling anxious, you’re not alone. Objects have the power to do just that. In fact, when working couples gave tours of their homes, women who used more words describing clutter and disorganization also tended to show levels of the stress hormone cortisol, suggesting chronic stress. On the flip side, those who described their homes as being restful or talked about their beautiful outdoor spaces were less stressed and reported less sad feelings as the day went on.

What you can do: Set aside 10 to 15 minutes at the end of each day to put stray items away.

Distracted much? Clutter makes it hard to focus

Got a lot of stuff on your desk? It may make it harder to do your job. That’s because a cluttered environment can make your brain less effective at processing information — and more prone to frustration.

In other words, taking a timeout to organize your space may actually save you time by allowing you to work more efficiently.

What you can do: Clear your computer desktop — and your physical one — at the end of each day.

More stuff doesn’t equal more fun

As much as advertisers may work to convince you otherwise, having more things doesn’t necessarily make you happier. Case in point: In one experiment, when toddlers were given just four toys to play with, they played twice as long as when they had 16 toys to choose from.

Flitting from toy to toy doesn’t just mean more picking up for caregivers either. It means lost opportunities to develop longer attention spans during free play that can translate to better focus and attention later in life as well.

What you can do: Box up extra items and put them out of sight, out of mind. Ready for a change? Swap boxes for a fresh mix of toys. Don’t miss them? Sell or donate the extras. (No kids? Try the same technique with your clothes.)

A tendency toward hoarding can keep you up at night

Sleep problems keep as many as a third of adults up at night. And while experts have long recognized a link between insomnia and mental health conditions like depression and anxiety, another link is emerging in research: hoarding.

Hoarding disorder, which affects just 2 to 6 percent of the population, goes far beyond disorganization or a garden-variety tendency to accumulate stuff. It is diagnosed when clutter becomes so debilitating that space becomes unusable and even unsafe. One possible reason for a connection between hoarding and sleep: Lack of sleep inhibits decision-making, namely decisions about acquiring (or getting rid of) stuff.

For the other 98 percent of people who don’t have hoarding disorder, but simply struggle with “too much stuff” syndrome, consider this: Having fewer things means making fewer choices throughout the day. And that may add up to less willpower spent trying to make the right ones.

What you can do: Brush up on your healthy sleep routine. Try winding down with a cup of herbal tea and a good (paper) book, rather than TV or social media.

When you think of taking care of yourself, think of your health, plan fun events with your loved ones, but also have a peaceful and organized living space.

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.