I’ve been insisting that the housing market is not crashing as many predictions have indicated. Redfin, Zillow, Opendoor, and more iBuyers are up and down on their predictions. However considering their stability in the market their credibility is questionable.

I pulled this from Black Knight Data and Analytics President Ben Graboske recent report.

While mortgage rates have eased and home prices have fallen in many markets, affordability still has a ‘stranglehold on much of the market,’ according to research released by Black Knight

Mortgage rates have eased from last year’s peaks and home prices in many markets have posted double-digit declines. But affordability “still has a stranglehold on much of the market,” according to research released Monday by data aggregator Black Knight.

With the monthly mortgage payment required to buy the average home still 40 percent higher than a year ago, most homebuyers are paying points to buy down the interest rate on their mortgage, said Black Knight Data and Analytics President Ben Graboske.

“What we’ve seen in response to this challenging environment is greater reliance on permanent rate buydowns by borrowers,” Graboske said in a statement. “There have been murmurs and stories around temporary buydowns, but those remain a relatively small share of originations in general.”

For the week ending Jan. 21, 56 percent of homebuyers locking rates on purchase loans paid points to permanently buy down their rate, Black Knight found. That’s down from 70 percent last fall when mortgage rates were hitting 2022 peaks.

Borrowers spending more to buy down mortgage rates

Source: Black Knight Mortgage Monitor.

But in raw dollar terms, many mortgage borrowers were forking out about three times as much money to buy down their rate in January — $4,300 on average — as was common before the pandemic.

Paying one point equates to an additional $1,000 in costs for every $100,000 borrowed. Today, borrowers are not only paying more points, but higher home prices mean they’re taking out bigger loans, making rate buydowns costlier.

Black Knight data shows that from 2018 through 2020, borrowers taking out purchase loans or refinancing paid about one half a point on average, at a cost of about $1,500 on a $300,000 loan.

Borrowers buying down their interest rate in the third week of January paid 1.25 points on average, or $4,300 in additional costs on a $344,000 loan. At the end of September, when points peaked at 2.03 percent, borrowers were paying an average of $6,900 to buy down their rate.

While homebuyers buying down their rate in January paid an average of 1.16 points, borrowers refinancing their home to cash out equity paid 2.06 points on average — or about $5,500 on the average cash-out refi of $266,000.

“The oversized rate buydowns on cash-out refinances suggest borrowers are utilizing their historically strong equity positions to reduce the interest rate impact as they tap available equity,” Black Knight analysts noted.

Many lenders have recently begun offering temporary rate buydowns that only last one to three years. In some cases, temporary buydowns are offered as a seller concession instead of a price reduction.

But Black Knight’s data shows that temporary buydowns peaked in popularity in October and November, when about 4 percent of homebuyers locking rates on purchase loans took advantage of that option. Since then, temporary rate buydowns have waned in popularity, accounting for only 3 percent of rate locks during the third week of January.

Temporary rate buydowns haven’t taken off

Source: Black Knight Mortgage Monitor.

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The limited popularity of temporary buydowns may be for the best, since they could spell trouble for borrowers and investors down the line, Black Knight noted.
A 3-2-1 buydown reduces the interest rate by 3 percentage points in the first year, 2 percentage points in the second year and 1 percentage point in the third year. After that, the borrower pays the original locked rate for the duration of the loan term.

“Given that temporary buydowns with stepped provisions result in payment shocks to the borrower as their rates increase each year, the impact of such loans warrants oversight as we move into 2024 from both a delinquency and prepayment perspective,” Black Knight warned.

National mortgage delinquency rate ticks up from record low

Source: Black Knight Mortgage Monitor.

While mortgage delinquencies remain well below the 2000-2005, pre-housing bust average, the national delinquency rate crept up 7 basis points from November to December, to 3.08 percent.

Foreclosure starts were also up 15 percent from November to December, to 26,900 — the third consecutive month-over month increase. But foreclosure starts remained 30 percent below pre-pandemic levels, with lenders initiating foreclosure proceedings on just 5 percent of the more than 500,000 homes whose owners were more than 90 days behind on their payments.

More borrowers have limited or no equity

Source: Black Knight Mortgage Monitor.

Homeowners with mortgages saw about $2.3 trillion in equity evaporate during the last six months of 2022, leaving close to 5 percent of indebted homeowners with limited or no equity to protect them in the event of a downturn.

“While equity levels remain historically high, falling equity along with rising short-term rates are expected to create headwinds for home equity lending as we press forward into 2023,” Black Knight analysts noted.

Home prices down from peaks in most markets

Source: Black Knight Mortgage Monitor.

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Home prices have retreated from 2022 peaks in all but four of the nation’s 50 biggest markets, with every major market in the West seeing prices fall by 6 percent or more after adjusting for seasonal factors, including:

• San Francisco (-13 percent)
• San Jose (-12.7 percent)
• Seattle (-11.3 percent)
• Phoenix (-10.5 percent)
• Austin (-9.7 percent)
• Las Vegas (-9.3 percent)
• Sacramento (-9.3 percent)
• San Diego (-8.6 percent)
• Los Angeles (-7.6 percent)
• Salt Lake City (-6.9 percent)
• Denver (-6.9 percent)
• Riverside (-6.8 percent)
• Raleigh, N.C. (-6.3 percent)
• Portland, Oregon (-6.1 percent)

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Mortgage payments still eat up more income than at 2006 peak

Source: Black Knight Mortgage Monitor.

With mortgage rates also falling from 2022 peaks, the monthly mortgage payment required to purchase the average home with 20 percent down has decreased by more than $200 since October, but was nearly $600 higher than a year ago.

At 34.8 percent, the national payment-to-income ratio is down from a recent high of 38.4 percent in October, 2022 when rates averaged nearly 7 percent. But the national payment-to-income ratio remains above the peak seen in 2006 before the Great Recession, and affordability “is expected to continue to dampen demand and put downward pressure on home prices as we move into the traditional spring homebuying season,” Black Knight said.

There is still room for opportunity in real estate

Although 2022 may go down in history as a year of housing market volatility, 2023 offers a chance for normalcy to return. As home sales and prices level off, many Americans who were on the sidelines last year should feel comfortable jumping back into the housing market as mortgage rates are predicted to level off as well.In order to get a lower interest rate, many first-time home buyers are willing to pay points.This results in a stable and manageable monthly payment, something that many first-time home buyers overlook.

My predictions with current and future sales in 55 Plus communities.

When conditions are right, value continues to rise. Buyers were less likely to make purchases in November, December, and the first three weeks of January because they were preoccupied with holiday preparations and celebrations.

These baby boomers are in the market, and they are willing to pay above asking. Most of the time, our team uses cutting-edge methods of promotion that have been shown to be highly effective. If you or anyone you know is interested in purchasing or selling a home in a 55+ community, please contact me, Dan Swing. 904-671-9225 Our team can also assist you in a safe home purchase and reasonable price negotiation outside of these areas.

Stock Outages Will Continue.

To begin, the nationwide inventory shortages that have persisted for the past few years will persist. The housing market still has not fully recovered from the effects of the Great Recession, and we are about 3–6 million housing units short of where we should be (rental and for sale). If that’s what you want to call it.The communities geared toward people aged 55 and up are thriving.

Combined with the widespread shortages of raw materials and workers in the post- Covid world, market upheaval has become the new normal.Ultimately, the United States needs to add about 5.5 million single-family and multifamily units to keep up with growth in population and demand. The current rate of inflation will only increase if this trend is not reversed.

Securing Rates.

Buyers’ reluctance has been exacerbated by the dramatic shifts in mortgage interest rates over the past few years. Inflation has slowed, and interest rates, while still double what they were a year ago, should level off below 6% by 2023. First-time buyers often prefer adjustable-rate mortgages in this scenario because they have a lower interest rate than fixed-rate loans. Similarly, the average home ownership period for this group of buyers is shorter.

Uncertainty is bred by inflation.

Last but not least, inflation continues to sow doubt in the hearts of would-be purchasers, just as it has done all over our economy.
In a market where 28% of homes are selling for more than their asking price, it’s wise to advise first-time buyers to lower price point in their home search to avoid going over budget. Last year, buyers typically purchased their homes for 100% of the asking price.

The National Association of Realtors advises its members to keep informing their clients about government-sponsored programs available in their area —especially those for first-time home buyers—and the variety of low down-payment financing options offered by lenders, despite a decline in the number of first-time buyers in 2022 compared to the previous year due to housing affordability challenges for many.

Strong connections with multiple lenders facilitate a smooth transition and relocation for us. Unlike Opendoor, They boast “The New Way To Sell Your Home!” I’ve been practicing their policy and model for years, actually since 2012. Many seasoned agents are able to and willing to provide buyers and sellers with options for dealing with transitional challenges, such as locating the most favorable mortgage terms and agreeable arrangement. I might add that RE/MAX agents are in every state of America and successful manage smooth transactions and transitions in all facets of your buying and selling experience and MAXIMIZE your net profit on the property your selling.

The stabilization of the housing market is good news after several years of instability. Agents who assist their clients in adapting to the ever-changing market conditions are increasingly valuable. Even though it’s impossible to know for sure where the economy and international markets are headed, there is a wealth of data and useful resources available to consumers to arm them with as much information and understanding as possible before engaging in any financial transaction.

Residential real estate prices increased by 8.6% annually but decreased by 0.2% monthly. CoreLogic predicts home prices will be lower in the second quarter of this year compared to the same period last year. Home prices have dropped 2.5% since their peak in the spring of 2022 and are expected to continue falling.With exception of the Southeast!

It has also been my experience that the 55 and older communities are still holding strong in value. We saw a slight decrease in the sales price during the holidays and that’s historically normal. It continues to be my opinion that the majority of these communities will continue to appreciate in value this year with an estimated 4.2% by years end. We will experience a great deal of sales activity beginning the third week in January 2023 as the holidays are over and serious retires are fed up with the Winter Cold and Snow! Expect to see an increase in buyer activity through April in this Market.

We see a great deal of misleading information claiming values are declining or decreasing. In fact, many homes are being listed higher than market value and the experienced consumers do their homework and sees it and will not view these properties until the prices are inline with values in their respected areas. Thus the longer the property is on the market the less likely it will receive offers. Common rule of thumb, the longer the property is on the market it raises red flags to whether something is wrong with it. With this said, communities not impacted by the baby boomer influx will be more incline to experience CoreLogic predictions.

CoreLogic, is a company that keeps tabs on home prices across the country, and predicts that prices will begin falling year over year beginning in the second quarter, with a possible uptick by year’s end. I believe this analysis is reasonable to believe outside the 55 and older market place.

Even though home price growth has been slowing rapidly and will continue to do so in 2023, strong gains in the first half of last year suggest that total 2022 appreciation was only slightly lower than that recorded in 2021, according to Selma Hepp, deputy chief economist for CoreLogic.Consumers’ skepticism of the housing market and the economy as a whole means that “2023 will present its own challenges.”

While home prices dropped by 0.2% from October to November, they increased by 8.6% from November 2017 to November 2018. A 21-month run of double-digit growth has come to an end, with this year’s increase being the lowest in the last two years.

CoreLogic reports.The firm expects prices will rebound toward the end of the year and increase 2.8 percent compared to where they were in November 2022. CoreLogic noted that there are still markets showing annual price increases in the double digits.
Meanwhile, declines were even steeper in some other Sun Belt markets.

In terms of annual growth, home prices in Florida (18%), South Carolina (13.9%), and Georgia (11%) have all been the best performers through November (13.6 percent).

The most popular areas in Florida, data collected by Forbes!

You would more than likely believe Florida’s main go to metro areas, Miami, Orlando and Tampa — the hottest areas in the state — would make the Top 3 go to areas in Florida. However, this was only the case for one of the cities mentioned. Forbes based the order on various factors, such as population, median home price, estimated monthly expenses, median income, unemployment rate, community wellness score and criminal offenses reported.

Tampa, Florida, has topped the list and taken first place. The city is close to both Orlando and Miami, and it has some of the most beautiful beaches on the West Coast.There are many young families in the area, making it the ideal balance between the city center and the suburbs.Tampa has a median home price of $437,000.

Next up is Jacksonville at number two, followed by Gainesville at number three, Cape Coral at number four, and finally Orlando at number five. Forbes calls Orlando “more than just a destination for tourists and work conferences,” but the city is much more than that.This city has a higher unemployment rate (2.9%) and number of reported crimes (13,682) than those ranked higher, but the research doesn’t specify why it’s not a top 3 pick.

In the top ten, Miami comes in at number six.Even though Forbes lists it as one of the most populous American cities, not everyone is happy to call it home. During the summer, temperatures can soar to dangerous levels, and housing costs can skyrocket.
In Miami, a house costs a median of $617,000.

Melbourne (No. 7), Sarasota (No. 8), Tallahassee (No. 9), and Pensacola (No. 10) round out the Top 10 cities (No. 10).

Although Hepp deputy chief economist for CoreLogic.believes the recent drop in mortgage rates is good news for the housing market, he acknowledges that potential buyers are still struggling with the idea of buying in light of the possibility of further price declines and a continuing inventory shortage. Still, 2023 may prove to be a year of housing market resilience thanks to rising affordability and a brighter economic outlook than was previously anticipated.

President Carter took office in 1977, during a period of “stagflation,” which is defined as a period in which inflation is high or increasing, economic growth is slowing, and unemployment cannot be measured.

It creates a quandary for economic policymakers because actions aimed at lowering inflation may exacerbate unemployment. As a result of a combination of high inflation and slow economic growth. Carter’s enacted fiscal policies aimed at containing inflation by reducing deficits and government spending. Something that the current administration continues to ignore, with a historic (31) Trillion dollar deficit announced this Month of October 2022.

Responding to long-standing energy concerns, the Carter administration enacted a national energy policy aimed at long-term energy conservation and the development of alternative resources. The later our current administration is determined to proceed with.

In the short term, the country faced an energy crisis in 1979, As growth stalled the U.S. Federal Reserve took aggressive steps to rein in rampant inflation. The Fed did so by raising interest rates to historic highs – so high, in fact, that the going 30-year fixed mortgage rate stood at 18.5% in 1981.

We will no longer be an independent leader in oil production, in my opinion, once our oil reserves are depleted, which is expected by the end of this 2022 year.

To stabilize infrastructure funding, the federal government will need to engage their gas price tariffs, and local and state agencies in many states will be forced to engage their fuel tariffs, which have been waived for the month of October 2022. Our level of assurance may well rival that of the late 1970s!

At the time, an $82,000 home, with 20% down, would cost $1,109 a month, excluding fees, taxes and insurance.

If 18.45% mortgage rates were still around today, a $322,700 home, with 20% down, would cost $3,986 a month, with total interest payments over 30 years of the loan amounting to $1.18 million.

Today, at 4%, that same $322,700 home costs about $1,232 a month, with a total cost of about $444,000 over 30 years.

As inflation ebbed in the 1980s, U.S. mortgage rates gradually slid downward, and kept sliding, well into the 21st century:

Yearly Average Mortgage Rates:

• 1981 17.00%
• 1985 12.96%
• 1990 10.31%
• 1995 9.13%
• 2000 8.25%
• 2005 5.66%
• 2010 4.98%
• 2015 3.66%
• 2019 4.45%

What Has Been the Impact of Mortgage Interest Rates?

In the U.S., the price of borrowing large sums of money from a bank or a mortgage lender began to take hold on the populace in the mid-20th century, and has never lost its grip, even through a series of severe downward economic cycles (including severe recessions in 1973-75 and 2007-09).

As history has shown, American families have always sought greener pastures, particularly when they were working in good jobs with decent pay and were willing to borrow more money for a new home.

As interest rates fell in 2019, Americans continued to rely on the mortgage interest rate model to buy and refinance new homes, a trend that will continue until April or May of 2022!

The Federal Reserve’s continued involvement in the nation’s economy, reducing rates when the economy is in danger and increasing them when the economy becomes overheated, therefore consistently changing the mortgage market around the edges.

Nonetheless, economists do not expect the US mortgage market to revert to the late 1970s and early 1980s, when interest rates peaked at 18%. That’s good news for today’s home buyer, who, like his or her forefathers in ancient Rome, still believes in the concepts of “pledge” and “death” when it comes to obtaining a mortgage to purchase a home.

While it is well known that history repeats itself, will our current administration and President Biden become the next President Carter to bring the American dream to it’s knees?

What are your thoughts?

Resources Lillianb DIckerson inman news.

According to an analysis by CNBC that weighed each state’s economic health, annual home price appreciation, new construction per year and foreclosures and insolvency from the first quarter of 2022, Utah has the most stable housing market in the country right now.

The financial news outlet drew data from the recently released CNBC America’s Top States for Business study, the Federal Housing Finance Agency (FHFA), the U.S. Census Bureau and Attom Data Solutions.

1. Utah

Old Paria, Utah | John Fowler / Unsplash

2022 Economy ranking: 6

Home price appreciation: 27.1 percent

Housing starts per 1,000 people: 12.2

Foreclosure rate: 1 in 2,063 housing units

Underwater mortgages: 1.4 percent

Utah, undoubtedly, has a hot housing market right now.

The state boasts the second-highest rate of rising home prices in the country, but also the fastest rate of new construction. In addition, its foreclosure rate is low and the economy is in a strong position.

2. Washington

Seattle | Photo by Luca Micheli on Unsplash

2022 Economy ranking: 3

Home price appreciation: 20.1 percent

Housing starts per 1,000 people: 7.3

Foreclosure rate: 1 in 4,965 housing units

Underwater mortgages: 1.2 percent

Although Seattle has often been pinned over the years as a city with a severe housing crunch and affordability issues, the state’s sustained economic growth has helped place it in a strong position on this ranking list. Additionally, foreclosure rates and underwater mortgages are quite low.

3. Florida

2022 Economy ranking: 4

Home price appreciation: 25.7 percent

Housing starts per 1,000 people: 9.6

Foreclosure rate: 1 in 1,211 housing units

Underwater mortgages: 1.4 percent

There have been conflicting reports over the course of the pandemic about whether or not everyone is moving to Florida, with its attractive weather year-round and favorable taxes.

Still, rising prices and rates of construction reflect strong demand, at least for now.

4. Texas

2022 Economy ranking: 8

Home price appreciation: 19.3 percent

Housing starts per 1,000 people: 8.9

Foreclosure rate: 1 in 2,326 housing units

Underwater mortgages: 2.5 percent

Texas is another state that’s seen a lot of press in the last few years for its growing population, as buyers in pricier markets like California got fed up with the competition during the peak of the pandemic-fueled housing market.

In response, home construction is up to help meet demand and there are plenty of qualified buyers ready to adopt those new homes.

5. Idaho

2022 Economy ranking: 5

Home price appreciation: 27 percent

Housing starts per 1,000 people: 10.5

Foreclosure rate: 1 in 6,015 housing units

Underwater mortgages: 1.6 percent

Boise has consistently ranked as one of the nation’s hottest markets, contributing to overall strong housing demand throughout the state.

New construction is helping bolster the state’s inventory, CNBC’s report noted, but foreclosure rates are also on the rise (albeit still, quite low compared to other states), which may be a warning signal if the economy takes a sharp downturn.

6. Tennessee

2022 Economy ranking: 2

Home price appreciation: 24.1 percent

Housing starts per 1,000 people: 8.2

Foreclosure rate: 1 in 2,797 housing units

Underwater mortgages: 2.9 percent

According to CNBC’s analysis, Tennessee has the second strongest economy in the country behind North Carolina.

The stable housing market and rising prices have largely contributed to this factor. However, the report also warns that foreclosures and underwater mortgages have been on the rise.

7. Vermont

2022 Economy ranking: 33

Home price appreciation: 20 percent

Housing starts per 1,000 people: 3.2

Foreclosure rate: 1 in 13,930 housing units

Underwater mortgages: 1.1 percent

Individuals seeking an escape from larger cities have given Vermont’s housing market a boost, contributing to rising prices and new mortgages. Despite these healthy signs, the state’s economy and new construction have both lagged, bringing down Vermont’s overall ranking.

8. Arizona

2022 Economy ranking: 22

Home price appreciation: 27.4 percent

Housing starts per 1,000 people: 9

Foreclosure rate: 1 in 1,861 housing units

Underwater mortgages: 1.4 percent

Arizona has become another Sun Belt hot spot, with spiking home prices and low inventory.

However, the state’s construction surge should provide some needed relief. Increasing foreclosure rates are something to keep an eye on, CNBC’s report noted, but home equity generally is in a strong position.

9. South Carolina

2022 Economy ranking: 13

Home price appreciation: 21.4 percent

Housing starts per 1,000 people: 9.5

Foreclosure rate: 1 in 1,081 housing units

Underwater mortgages: 3.4 percent

South Carolina is in the midst of a very heated market, with tight inventory and regular bidding wars, helping prices to continue to rise.

However, strong new construction starts should eventually help mitigate that demand in upcoming months.

10. South Dakota

2022 Economy ranking: 12

Home price appreciation: 20.1 percent

Housing starts per 1,000 people: 8.8

Foreclosure rate: 1 in 17,724 housing units

Underwater mortgages: 4.8 percent

South Dakota’s economy is in good standing with home price appreciation still going strong and housing starts also at a healthy pace.

The foreclosure rate is extremely low. However, with underwater mortgages increasing, some trouble may be brewing for the housing market, CNBC noted.

Florida residents are outraged by the homeowner insurance costs. We’re seeing rate increases of up to 46 percent PLUS! An 88-year-old stated his increased from $1,640 to $2,473. It just doesn’t seem reasonable to see so much increase all at once! I’ve lived in Florida over 40 years and never experienced anything like this. Did I expect it? of course, however this certainly opens our eyes to reality. It’s important to reevaluate the value for your home, replacement costs and I urge you to review each line item with your insurance carrier. Also keep in mind, insurance carriers do not allow changes if a tropical storm or hurricane is within 500 miles of your location.

Floridians have experienced rate increases and challenges for many years. Insurance fraud for replacement roofs, Flooding, and Hurricanes are huge issues resulting for much of this increase. Many Insurance carriers have fled Florida due to these elements.

Tallahassee – Friday June 24, 2022: The Florida Office of Insurance Regulation (OIR) had established the 2022 personal property and commercial property insurance rates for the Citizens Property Insurance Corporation (Citizens). Citizens Property Insurance Corporation (Citizens) was established in 2002 by the Florida Legislature as a not-for-profit insurer of last resort. It was created to provide both wind-storm coverage and general property insurance for home-owners who could not obtain insurance elsewhere. Headquartered in Tallahassee, Citizens quickly became the largest insurer in the state with Citizens Insurance.

OIR “Office of Insurance Regulations,” held a virtual public rate hearing to receive public comment on March 31 this year. At the hearing, Citizens provided testimony in support of its rate recommendations and received comments from members of the public on the effects of the rate filings. Public comments were accepted for consideration on rate filings until April 14.

Following a review of the complete record, OIR established rates for Citizens’ Coastal Account (CA), Commercial Lines Account (CLA), and Personal Lines Account (PLA). The effective date for new and renewal rates is September 1, 2022.

SB-2D was passed by lawmakers following a special legislative session. According to the statute, “insurers that participate in the Reinsurance to Assist Policyholders or “RAP” program this year “must cut their rates to reflect the cost savings gained by participating in the program.”

Reinsurance is essentially insurance for insurance firms, and the cost, like everything else, has risen, according to insurers.

The legislation’s premise is that if insurers receive reinsurance from the state that they do not have to pay for, they will pass those savings on to customers. According to the statute, insurers were obligated to file the rate decreases “no later than June 30.”

Unless we get some help from the government. It’s unlikely that things will improve with any insurance carrier. It’s my understanding, 69 insurance companies applied for rate reductions with the Office of Insurance Regulation. Many insurance firms and underwriters are suggesting rate reductions ranging from 1% to 6%. With this gap, the average percentage experienced will most likely be 1-2 percent. The Federal Association of Insurance Reform claims. These will not likely affect your latest insurance renewal and see your rates going down.

For example, the Collins’ company has not filed a rate reduction for this year, but their latest increase in premiums was 46%, and his insurer requested a 48% increase from the Office of Insurance Regulation for next year — so reducing 1-2% wouldn’t really move the needle.

“If the goal was to reduce rates for consumers, certainly that’s not materializing,” Per Paul Handerhan, President of the Federal Association for Insurance Reform.

Meantime, if you would like to check to see if your insurer has filed a rate reduction, CLICK and follow these steps:

Republicans, who wrote and supported the legislation, said people should start seeing a decrease in their property insurance premiums in 12-18 months. I’m guessing it takes that long for these measures to take affect and impact the American public, if at all.

1. Click the “Advanced Search” tab at the top of the page.
2. Select “Property & Casualty”
3. In the Keywords box enter “SB 2D: RAP Filing” and hit search.
4. Companies will appear under the results tab.
5. Find your company then click the arrow on the far left of the company’s name.
6. Next click, the documents symbol under “Filing Actions.”
7. Request the Explanatory Memorandum or the Actuarial memorandum. You will have to enter your email address and prove that you are not a robot by answering a numerical question, then the document will be emailed to you.

Americans pushed their limits when purchasing a new home. Many new homes have been secured with purchase agreements, and the builders have not broken ground yet. Thousands of homes are only half completed do to supply shortages and most may not be move in ready and closed until the fall.

It’s possible that some high-earners overspent on their homes based on standard benchmarks: For example, a $1.7 million home with a 20% down payment would cost $100,000 per year in mortgage payments. According to Bloomberg, that would account for 40% of a pre-tax income of $250,000 or more. Most financial experts recommend limiting home costs to 30% of income. However with the closing of their new build hanging in the air of uncertainty, will these buyers be patient and close on their dream home? Lot’s of questions that not even the best data resources can answer.

A 40-year high in inflation is prompting many Americans to reassess their financial goals. Food, housing, fuel, and other basic necessities are all seeing increases in price due to the current rate of inflation, which stands at 8.3 percent.

According to a new BMO Harris Bank research, 25 percent of Americans are postponing retirement because of inflation. One in three people who earn $250,000 a year say they’re living paycheck to paycheck, according to a survey from Pymnts.com and LendingClub.

It’s becoming increasingly common for people to use their savings accounts as inflation rises, according to a BMO Harris Bank survey. The survey indicated that 36% of Americans have already lost money due to inflation.

As of this month, the National Association of REALTORS annual ®’s survey found that the average American consumer is spending $500 more per month on living expenditures than they did a year ago.

In a research by BMO Harris, consumers reaching retirement age said they are limiting their dining out, shopping, and driving habits because of rising costs. One asset management business, Schroders, found that only 22% of Americans believe they have enough money saved for a decent retirement, down from 26% a year earlier. Among the poll participants, more than half predicted that they will have less than $500,000 in savings when they retire. Most respondents, however, settled on a median goal of $1.1 million for their retirement savings.

As BMO Harris Bank’s head of customer strategy Paul Dilda explains: “Consumers must think differently about their finances in an inflationary environment.” BMO Harris Bank is a Chicago-based institution with locations throughout the Midwest and West Coast.

Dilda asserts that inflation is having a particularly negative impact on the nation’s younger citizens.
As a result, significant purchases like a home and a car may strain their budgets even more, he says.

Source: BMO Real Financial Progress Index, National Association of Realtors, FORTUNE June 1st 2022, Personal Finance-Retirement, Motley Fool, “More Than a Third of 250K Earners Live Paycheck-to-Paycheck. By daily Upside June 1 2022 at 9:00PM

You’ve already used a VA loan to purchase a home. Now, you may be wondering if you are eligible for a second VA loan. The answer is yes, but you should know how your entitlement benefit works, what your financing cost will be, and a variety of other concerns before applying.

What is the maximum number of VA loans you can have? VA loans are available to you if you have residual entitlement (more on that below). Some of the most common situations that necessitate an additional VA loan include:

To acquire a second house with a VA loan, you must first sell the first one, re-establish your entitlement, and then apply for a new VA loan.

If you sell each house and move, you can have as many VA loans as you desire for the rest of your life.

You move from one VA debt to another by refinancing your current loan.

At the same time, you may be the beneficiary of more than one VA loan for distinct properties.

Using a VA loan several times can be done in a variety of ways.

Your VA eligibility can be restored if you sell your existing home.

To take advantage of another VA loan, you don’t always have to sell your home or relocate.

With a VA streamline refinance, you can lower your interest rate and monthly payment by refinancing into a new VA loan.

VA cash-out refinance loans need extra documentation but allow you to access the equity in your property.

This is the third option,

It involves taking out two VA loans for two separate properties at once.

There are times when an active-duty member obtains a Permanent Change of Station (PCS) order, and the VA lender will need to authorize numerous loans.

Basically, you’ll have to demonstrate that you have the financial resources to repay both loans simultaneously.

The benefits of a VA mortgage

To qualify for a VA loan, a borrower must meet the VA’s loan eligibility requirements.

This helps you figure out how much money you can borrow before you must put down a deposit. VA loans with lower interest rates, no down payment, and more lenient eligibility requirements are offered by lenders because of the protection afforded to veterans.

In 2020, the Department of Veterans Affairs (VA) abolished loan limits for veterans with full entitlement.

When it comes to partial entitlement, things get a little more complicated. Either 36,000 dollars or 25 percent of the loan amount up to the conforming loan limit commonly serves as the starting point for entitlement calculations.

Currently, $647,200 is the cap in most sections of the country, although in some markets, up to $970,800, the limit is in effect. A bonus of 25% of the $647,200 maximum is yours as a result.

An example., you have a $200,000 loan, which means that 25% of your entitlement is now being spent. You’ve decided to take out two VA loans now. You’ve already tapped into $50,000 of your quota for the year.

A bonus entitlement of $161,800 (25 percent of the conforming limit) now exists, but you’ll need to deduct $50,000 before claiming the bonus. In this case, you have $111,800 in entitlement for the second loan.

There is no limit to how much you can get, however. You may acquire a $447,200 loan from a VA-approved lender because the VA pledges to pay the lender a quarter of that amount if you default.

If you have full entitlement, there is no limit to the VA loan amount, and if you meet the lender’s requirements, you won’t have to pay a down payment if you qualify.

Call the VA at 877-827-702 to speak with a home loan agent if you have any outstanding entitlement inquiries.

Customers can contact the company’s customer care department between the hours of 8am and 6pm Eastern Standard Time, Monday through Friday.

Getting a second VA loan is a simple process.

Getting a second VA loan is likely to feel very much like getting your first VA loan. The following is a step-by-step breakdown of the process:

Request a copy of your eligibility certificate.

As a result, lenders will know if you are eligible for a VA loan, and it will also assist you determine how much of your entitlement benefit is available for usage.

You can acquire it via your regional service center or through your benefits portal.

Your discharge papers may also be necessary.

Consider your options before deciding.

Buying a new house may necessitate selling your current residence to maximize your entitlements.

Decide what’s more essential to you: more money or less work if you refinance.

A VA IRRRL or a cash-out refinance may be better options if you’re just thinking about refinancing your mortgage.

Make sure your finances are in order before you begin.

Even though the Veterans Administration does not need a minimum credit score, VA lenders often do. It’s important to check your credit record and pay off any outstanding debts before applying for a second loan to show that you can afford your new monthly mortgage payments.

Buying a home vs. renting based on eligibility

Why not consider renting your current residence while you apply for a VA loan to purchase a new one?

If, for example, you’re stationed elsewhere but don’t want to sell your current property, this could happen.”

David Reischer, an attorney in New York City, argues that in this instance, “you decide to rent out your existing house and purchase another one.” Only one restriction applies: You can’t rent out your primary residence and then buy a comparable-sized home nearby.

To accommodate a growing family, the second home would either have to be a larger residence or be located in a different neighborhood.

For the second VA loan, “you would not be able to use any of that rental income to lessen your debt-to-income ratio,”

That rental income may, however, help you qualify for a second VA loan by reducing your mortgage payment.”  A second VA loan’s effect on the cost of borrowing

It’s impossible to avoid the funding fee on a VA loan; you may end up paying more for it on your second loan. The funding charge is 3.6 percent if your down payment is less than 5% of the purchase price on your second VA loan (and any subsequent ones).

However, if you’re able to put down more than 5% or 10% of the purchase price, the funding charge drops to 1.65% and 1.40%, respectively.

It is possible to reclaim your VA mortgage benefits

Remember that you have an entitlement limit, but if you sell your property and pay off the VA loan in full, you can get your entitlement back. Loan repayment or refinancing doesn’t remove the entitlement amount from your residence; it just removes it from the property’s equity.

Fortunately, there is an exception to the VA’s must-sell rule: You can request a one-time restoration of your benefit.

Assume that the buyer of your property for sale is a veteran who assumes your existing VA mortgage. In this case, you can ask this person to substitute their entitlement for the same amount of entitlement that you originally used. In one case study, says that if they agree, possible the original entitlement will be restored.

Your entitlement to buy the house will be held hostage until the new owner fully repays the loan if they don’t agree.

Forever losing your eligibility for a VA loan.

It’s possible that you’ll be permanently disqualified from receiving a VA loan. It’s possible that the lender will be forced to refund the VA if you fail to make payments on your VA loan and your house is foreclosed and sold for less than you owe.

When the VA makes a loan payment to the lender, the amount is removed from your entitlement, and you can’t get it back.

This is also true in a short sale, where your home is sold for less than what you owe.

The one-time restoration of entitlement benefit is not available in the case of short sales or foreclosures; thus you cannot use it.

I have two VA loan specialist I can refer you to help clarify additional questions. Please call me (Dan Swing) at 904-671-9225

Is another large collapse in real estate on the horizon? Given all the headlines about a possible recession, rising inflation, significant interest rate increases, and the stock market sell-off, where are we headed? The news may be better than most people expect, say two of America’s top real estate economists.

What to expect as we look forward to the second half of 2022 and beyond.

Here’s what Appleton-Young and Tuccillo say is ahead in the Real Estate Market! 

Inflation is expected to slow down. Inflation was 8.3 percent in April, down from 8.5% in March. However, supply restrictions are steadily easing. Prior to settling back down, interest rates may rise more. Inflationary pressures mean that we won’t see mortgage rates fall below 3% any time soon.

The war in Ukraine, China’s lockdown, and the persistent energy supply issues are still major wild cards in the global economy. In order to return to our pre-war state, it will probably take us at least two years. Inflation expectations are routinely surveyed by the New York Fed. People’s expectations are what fuel inflation.

According to recent polls, most people believe that inflation would be 6.3% by 2022, which is a decrease of 2% from now. Even so, that’s much beyond the Fed’s 2% target, which is likely to prompt an overreaction from the central bank.

New York Fed poll results show a modest increase in consumers’ three-year expectations, which had previously been low but are now slightly raised at 3.9%. For the Federal Reserve, there is some support for a return to Paul Volcker’s era of low interest rates. https://www.federalreservehistory.org/people/paul-a-volcker

To combat inflation, Volcker raised interest rates and reduced employment. Like the pandemic, there is a price to lower inflation, and the burden falls more heavily on low- and middle-income families. It’s a balancing act for the Fed, which has two goals: low prices and low unemployment.

The economy will continue to grow at a moderate pace, and the unemployment rate is expected to remain stable. Over the remainder of the year, job creation is expected to continue.

It’s predicted the Fed will raise interest rates to a maximum of 6%. An continuing shortage of supplies and construction personnel is preventing the building industry from keeping up with current demand.

Because local regulations aren’t loosening any time soon, we’ll have to deal with them for a while. Despite the current increase in interest rates discouraging purchasers, buyers will return to the market when rates drop, say to 4.5%.

The markets can turn on a dime or perform a gradual squeeze. One of the issues we’re dealing with right now is that.

Final takeaways!

Appleton-Young reiterated the importance of the housing market in building inter generational wealth, saving and having a strong asset. 

That goal is getting further and further away for many people in this market. We must get more people on the ladder to home ownership by building smaller and more affordable housing and loosening up on overly restrictive zoning. 

Tuccillo’s final takeaway is that all market conditions may not be stormy as once thought.: 

But they will be very interesting. Over the next 18 months to two years, we’re not going to see a collapse. I don’t believe we will see stagflation. I just think that every day, there will be something else to worry us. And we’ll be worried, and the markets will be skittish, and the housing market will be skittish. But if you look at the underlying long-term trends and fundamentals, we’re fine.

I respect and believe the analysis presented in this article today, but the Biden Administration’s actions to reduce housing costs may completely muddy the waters with additional consequences. We have measures in place to assist with the challenges we face, and I believe America will right itself! In my opinion, burdening America with more debt service without renewable sources of replenishment will only delay recovery. Let’s see how America handles this before enacting legislation that will only delay recovery!