The Bank of Mom & Dad!

The Bank of Mom & Dad

For young adults looking to purchase a home for the first time, the Bank of Mom and Dad has grown increasingly more important, as many first time homebuyers look to their parents for down payment assistance. The share of first time buyers needing assistance from their parents has increased over the past few years due to the rise in home values, slow income growth and tight credit standards and the Survey of Household Economic and Decisionmaking (SHED) upholds this idea. The SHED asked homeowners to identify the sources of funds used for their down payment when they purchased a home and found that the use of loans and gifts from family and friends increased from 8 percent in 2007 to 21 percent in 2009, but has dropped to 13 percent in 2014.  With the demise of the CHDAP/FHA combo, we expect the use of family funds to rise significantly through 2016. 

More Rental Trends

A new Harvard study points out how the rent vs buy decision is becoming even more skewed towards buying as rental inflation continues to increase. The number of US households that spend at least half their income on rent could increase 25% to almost 15 million over the next decade. Note that the homebuilders are pretty much all venturing into multi-family housing as well as single family, which should alleviate this problem at least to some extent. We have had a production deficit for single and multi-family construction for several years, prices keep rising, and yet housing starts remain at about 75% of normal levels (ignoring the boom and bust years).

With the increase of renters converting to buyers, it is so important to know financing options early.  Refer your buyers to us for a pre-purchase evaluation.  We can get them on the right path so that when they are ready (i.e. - their tax return coming in), they will have planned and be ready financially and in the right frame of mind to purchase. 

Finishing & Starting Strong

Last week we talked about taking stock of your life.  Now it’s time to start making your launch pad  to rocket into 2016.  Here is an article of 5 effective ways to wrap up the year and use your momentum to launch into the New Year – CLICK HERE