Gimme Shelter
The Hit song “Gimme Shelter” by the Rolling Stones in 1969 has many similarities to our current 2024. Political tensions both abroad and at home are on the rise. The “millennials” and “Gen Z” folks are getting squeezed out of the opportunity to own their own home and/or even rent an apartment without having a roommate due to a lack of supply of affordable homes, and the divide between our political parties reminds me of the President Nixon days. Here in Metro ATL, a house in the $400K range is considered a “starter” home in many cases, requiring a down payment in the $12K to $20K range, and yielding a mortgage payment of more than $3000 per month including taxes and insurance based on national average rates. Average apartment rent in the Metro ATL area, according to RentCafe, is running in the $1800 per month range. To give this some perspective, a $1800 per month “all-in” mortgage payment back in 2022 could get you a home in the $300,000 range with only 3.5% to 5% down in most cases. That same $300K home might go for as much as $400K with a payment of $3000 or more. To qualify for a $400K mortgage, in most cases, you need to be making around $90K+ per year, which in many cases will take a two-income family to qualify. The other issue affecting these two age groups from purchasing a home is their large student loan debt coupled with their credit card debt, which is averaging over $4000 for Millennials and almost $2000 for Gen Z. Many also have car payments over $400 per month.
Needless to say, I understand why both groups believe that there are serious issues with our economy. Wages have simply not grown at the same pace as other goods and services, as well as housing. Their opportunity to have their own home or apartment is challenging in our current housing environment. Despite what our Federal Reserve heroes believe, our economy is having issues. Things are NOT robust, and these two age groups that are our future have honestly been forgotten by the Federal Reserve, who hiked rates to their current levels and basically priced many young Americans out of the housing market, whether owning or renting. FNMA, FHLMC, and HUD need to rethink their view on minimum down payments. Does putting down 3.5% vs. 0% really make a difference in the performance of the loan over time? If you look at VA loan (which can be a no downpayment loan) repayment numbers, they will tell you that the downpayment amount, or lack thereof, really does not affect loan performance. They should also look at possibly going from a 30-year fixed rate term to a 40- or 50-year rate term to lower payments and make housing more affordable. Bottomline, the agencies need to rethink their current programs and create programs that enhance the ability for the first-time homebuyer to once again be able to afford a home of their own and truly have an opportunity to be part of the “American Dream.”
Remember… The BEST RATE… IS A LOCKED RATE… with a float down… ask me about our program that allows you to lock your rate and then float down if rates move lower.
Make sure you (or your buyer) get pre-approved before looking at homes so we can determine if you are looking in the correct price range and have you armed to submit an offer with a pre-approval letter!
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Blog post date: Thursday, February 1, 2024
