I’ve Watched Real Estate for Decades: Here’s Why You Should Have Hope

If you’re young and looking to buy your first home, current trends aren’t your friend. This is because home buying is becoming an activity for middle-aged people. According to the National Association of Realtors (NAR), half of first-time home buyers this year are 40 or older. That was nine years ago, when the median age of first-time homebuyers was 35.4 years old, according to the New York Fed.

The age of homebuyers has been steadily rising this decade. But trends eventually die out. When it works, people will be able to afford homes before needing to wear reading glasses to sign mortgage paperwork.

Why talk about it now? I am retiring after nearly 25 years of writing about mortgages and real estate. This is my last column. For young people who feel discouraged but aspire to own a home, I want to put today’s unfriendly housing market into perspective. Believe it or not, the market can improve, and there are reasons for hope.

Today’s affordability crisis is the third I’ve seen. The last two crises are over. So it will be.

The first affordability crisis I witnessed began in the late 1970s and continued into the early 1980s. As the oldest baby boomers turned 30 in 1976, demand for housing increased. Home sale escorted. According to Nar’s historical data, home prices rose dramatically every year from 1977 to 1980.

Meanwhile, mortgage rates soared. Interest rates on 30-year home loans topped 10 percent in late 1978 and remained in the double digits for most of the 1980s. According to Freddie Mac, in 1981, the 30-year mortgage rate dropped to 18.63 percent.

The next affordability crisis occurred in the early 2000s, when Gen Zs were in their 30s to early 40s. They, too, wanted to own houses. More than 7 million existing homes were sold in 2005, and the median home price rose 12.4 percent that year — surpassing $200,000 for the first time.

For most of the 2000s, 30-year mortgage rates were stuck above 6 percent, and lenders created mortgage products that gave the illusion that homes were cheapness. Lenders market mortgages to borrowers.

Many of these loans were adjustable-rate mortgages that originated with extremely low interest rates. These loans seemed affordable until the first adjustment. When that first adjustment arrived and their interest rates jumped, many borrowers discovered their payments were ultimately unrealistic.

Real estate went kabuloi in real estate when millions of homeowners lost their homes to foreclosures. Domestic sales fell. The financial system almost collapsed, leading to the Great Depression.

The instability crises of the early 1980s and early 2000s occurred about 20 to 25 years apart. And now, 20 years after the recent recession, there’s the next generation Struggling to find housing They can afford it. One more time

I bring this history up to point out that we regularly go through periods when houses are not very affordable. Those periods end. This will do too. And I hope it won’t be as bad as the 1980s, with 18 percent mortgage rates, or the 2000s, with the Great Recession and all these predictions.

Affordability will improve as multiple factors converge: the number of homes on the market is increasing, home prices and rents are rising, and Mortgage rates They are likely to remain stable or fall slightly.

Rates for 30-year fixed-rate mortgages have been particularly stable since September: They’ve mostly been between 6.25% and 6.5%, according to Freddie Mac. Both the Mortgage Bankers Association and Fannie Mae predict rates will remain below 6.5 percent in 2026.

While mortgage rates are falling, prices are stabilizing in many markets. That’s because more and more homes are for sale, and more Home buyers Negotiating from a position of strength. In November, the general price rose 1.2 percent from a year earlier – slower than the overall rate of inflation.

Bind them all Real Estate Trends Put together, and you end up with a housing market where homes gradually become more affordable over time. Still probably not as fast as you’d like.

When I asked my colleagues what they were most anxious about when it came to home ownership, their questions boiled down to this: “How can young people find homes they can afford to buy, insure and maintain — while being close to amenities like hub airports and lots of things to do?”

This is a difficult question to answer, as I am tempted to draw on my own personal experience. And my experience is different than most, because I moved five times in my 20s and 30s, always to cities where I knew no one. So my answer might be amusing: move to where housing is affordable.

If you are willing and able to move, I recommend Midwestern cities that have relatively lower cost housing. Most Midwestern cities are not at risk from rising seas, hurricanes or wildfires. Home insurance There is no limit. A lot of these cities, especially college towns, have a lot of stuff to do — I’m talking about places like Columbus, Ohio. Madison, Wisconsin; And Pittsburgh.

Where does this leave people with unbreakable relationships in expensive cities? Before giving up on your home ownership dream, you should talk to real estate agents and mortgage loan officers. These experts “can tell you what you can do, or what you need to do, so you can do what you want to do,” said Chuck VanderStilt, a real estate broker in Valparaiso, Indiana.

You may find that you qualify for a lower down payment (or even a zero down payment). You may qualify for a First time home buyer grantor builders may offer incentives on new homes. You can get advice on how to build your credit so you can qualify for a mortgage, or get a better rate. You won’t know unless you ask.

And if the experts tell you that homeownership isn’t in the cards anytime soon, you can accept that you’ll continue to rent. Sometimes it pays to live in a vibrant place close to family and friends.

But if you expect another housing bubble to pop, I have bad news: I don’t think we’re in a bubble, and we won’t see a steep slide in home prices like we saw from 2006 to 2011.