So far, it’s been quite a ride this year, and our nation has truly seen its fair share of hurdles. From COVID-19 to record unemployment and then the resulting recession, just to name a few, the second quarter of 2020 has had more than a few challenges. Amidst the many roadblocks, however, the U.S. homeownership rate rose again, signaling great strength in the recovery of the housing market and an indication that even in a time of crisis, Americans still feel confident about buying a home.
Recently, the U.S. Census Bureau announced:
“The homeownership rate of 67.9 percent was 3.8 percentage points higher than the rate in the second quarter 2019 (64.1 percent) and 2.6 percentage points higher than the rate in the first quarter 2020 (65.3 percent).”
This challenging year of 2020 has seen many potential homebuyers using their time to search for homes that offer more space than their current rental apartments. And according to the Deputy Chief Economist for First American:
“We are seeing a Big jump in the homeownership rate today, mostly driven by younger households. We saw a spike in the number of owners, and a decline in the number of renters. This is the highest rate of homeownership since 2008.”
There are many reasons why the homeownership rate in this country is rising, and one of the key factors is historical. Rates hovering at all-time lows are helping to drive affordability and enabling more potential homeowners to enter the market today. According to a Bloomberg article and Ralph McLaughlin, Chief Economist for Haus:
“Mortgage rates are the icing on the cake for households that were thinking about buying…They found an unexpected opportunity during the worst economic downturn America has seen since the Great Depression.”
You might have considered purchasing a house over the last year. As of May 30, 2019, a 30-mortgage was 3.99% per Freddie Mac. On a home with a $300,000 mortgage that would equate to a principal and interest payment of $1,430.52! Today there are rates available as low as 2.625% and the payment for that same house would be $1,204.95 or $14,459.40 per year! At the end of the year you would have built equity of $6,664.22 or 46.09% of your monthly payments for one year! That does not include any appreciation value of the home. By the way in Austin, fortunebuilders.com indicates in their Austin Real Estate Market 2020 Overview, that the 1-year Appreciation Rate is 5.4%.
The average rent in Austin per Apartmentlist.com for a 3 bedroom is $1,965 as of July 2020. That is rent of $23,580 per year vs. principal and interest payments of $14,459.40 per year!
This growth is outstanding news for the housing market and for those who have recently found their new homes. If homeownership is on your shortlist this year, maybe now is a great time to have a virtual meeting with a real estate professional like our team at Front Door Properties to evaluate your current situation and take your dream one step closer to reality!
Perhaps historically low mortgage rates can help you to become a homeowner too.