You’ve probably heard me lament about the fact that Generation Y home buyers are not coming in to the housing market as quickly as we had hoped.

The Cromford Report has addressed several times about the fact that Gen Y-ers are less likely to purchase homes right now –being saddled with an average of $25,000 of debt for an undergraduate education and having seen their parents lose homes in the Great Recession. In fact, much of  last year’s dip in first time homebuyer purchases (sub $200k) was attributed to sluggish Gen Y home purchases.

Well, I thought you’d find this report interesting. Basically, we are finding that the sheer size of the Gen Y generation may compensate for the fact that some are unable or unwilling to purchase a home right now.

Some other highlights:

• Gen Y comprises the largest share of home buyers at 32 percent, which is larger than all Baby Boomers combined.
• Gen Y also has the largest share of first-time buyers at 68 percent.
• Thirteen percent of all buyers purchased a multi-generational home, one in which the home consists of adult children over the age of 18, and/or grandparents residing in the home
• Among all generations of home buyers, the first step in the home buying process is looking online for properties for sale.

Just food for thought. If you are reading this post on your smart phone while simultaneously texting your friends and flipping between vines, this data might impact you more.

Getting the right house the first time you buy a home will set you on the right path for the rest of your life.

I can help. Call me at 602-456-9388.

I don’t want to give you heart palpitations, but if you are planning to purchase a home, you might want to do it sooner this year, rather than later.

The Federal Reserve Bank signaled this week that it will begin raising interest rates as soon as June, but they promise not to jack them up.

I’m pretty certain that “jack them up” is a term of art around the Fed.  

So, given the impending rate increases, let’s review how interest rates impact the price of your home. 

Let’s start with where we are now. Interest rates for most lenders for FHA and conventional loans are hovering around 4.0% APR. 

If, as a result of the Fed’s increase, we go to 5% (it probably won’t go that quickly, but its hard to say), then here is the difference:

$200,000 home at 4% APR, with 5% down payment on a 30-year fixed loan = $907, principle and interest only.

$200,000 home at 5% APR, with 5% down payment on a 30-year fixed loan = $1,019, principle and interest only.

That extra $112 per month is $1,344 per year or $40,320 over the life of the loan!

Another way to look at it: At 5%, paying $907 per month, you would only be able to afford a $178,000 home. 

Here’s the double whammy: Home prices are increasing at about 3% per year right now in Phoenix. Add that to your interest rate increase.

A year from now, that $200,000 home might be on the market for $206,000. 

And the beat goes on….

So, what does this mean? It means that you want to consider getting in to the market before interest rates go up.

 Give me a call. I’m more than happy to help you navigate the market: 602-456-9388.