As we find ourselves in the heart of February 2024, the housing market presents a landscape filled with promising developments. Here are four compelling reasons to feel optimistic about the current state of affairs:

#1 Favorable Mortgage Rates

The trajectory of mortgage rates has taken a promising turn since last fall. After hitting highs, rates have descended, making homeownership more accessible for many. The Federal Reserve Board's projection of potential rate cuts further underscores this positive trend, provided inflationary risks remain manageable. Lower rates not only translate to reduced monthly payments but also signify improved affordability, particularly for first-time buyers or those looking to refinance.

#2 Increased Affordability for Homebuyers

Alongside the decline in mortgage rates, the income required to purchase a median-priced home has also decreased. This spells good news for aspiring homeowners, as it indicates a more balanced relationship between income levels and housing costs. With affordability on the rise, more individuals and families can realistically consider homeownership as a viable option, paving the way for greater financial stability and wealth-building opportunities.

#3 Housing Inventory Expands

The housing market is witnessing a notable expansion in inventory, offering buyers a broader selection of properties to choose from. Early reports suggest a surge in homes for sale, accompanied by an uptick in sellers listing their properties compared to the previous year. This increase in supply provides buyers with more options to find a home that aligns with their preferences and budget, reducing competition and potentially easing the buying process.

#4 Steady Home Value Growth

Despite the cooling of price appreciation, home values continue to appreciate steadily. Owners can take comfort in the fact that their investments are appreciating, albeit at a more sustainable pace. This steady growth in home equity not only enhances homeowners' financial positions but also serves as a testament to the enduring value of real estate as an asset class.

Bottom Line

As we continue through February, a traditionally busy period in the real estate market, now is an opportune time to either prepare for the upcoming spring rush or dive into the market head-on. Whether you're a first-time buyer, a seasoned investor, or a homeowner contemplating a move, the Greenway Mortgage team is here to provide guidance and support every step of the way. Together, let's make the most of the promising opportunities that the housing market has to offer in 2024. Contact us today to take the next step!

Homebuyer Resources

• First-Time Homebuyer Resource Page
• Loan Programs
• NJ First-Generation Down Payment Assistance Program
• NJ Conventional Down Payment Assistance Program
• Homebuying Comparison Chart
• Homebuyer Guide
• Mortgage Calculators
• Apply Now - Full Mortgage Application
• 5 Reasons To Work with a Mortgage Lender

When choosing your home, it’s helpful to consider the monthly cost of ownership rather than the price on the sales contract. Newly constructed homes often carry a higher purchase price than similar older homes. But the lower energy, maintenance and repair costs compared to an older home may make living there less expensive.

Here’s some information on the benefits of new construction and some handy comparison tools, too.

When choosing between an existing home and a newly constructed home, it’s important to look past the sales price to the actual monthly cost of owning your home. Newly constructed homes are likely to bring lower energy bills and require less maintenance, which could reduce your monthly out of pocket expenditures. And if you’re paying more in interest each month, you may have an added tax benefit too. Use this calculator to compare the true costs of owning an existing vs a newly constructed home.

The payment for a higher priced new home isn't always a lot more than the payment on an older home.

An older home may have major components at or near the end of their life cycle.

Consider roofs as example. They typically last 25 to 30 years. The average U.S. home has a roof that measures 1700 sq. ft. Roofers use increments of 100 sq. ft. or “squares” to price their work.

Older homes typically require more maintenance and repair.

Everything requires maintenance — from paint, siding and windows to electrical, plumbing and septic systems all the way to mechanical systems like heating or cooling. Most of these components have expected useful lifespans of 5 to 30 years. A new home will not likely require maintenance or repair costs for a long while, compared with an older home that may already have deferred maintenance needs as soon as you move in. Plus, new homes and their systems are typically covered by builder and manufacturer warranties. If something does require repair or replacement quickly, the cost is typically covered or minimized. Enter the cost to replace an item such as a furnace or A/C system, windows, siding, etc., to see the monthly cost to save in our Old vs. New Calculator here.

The cost of heating and cooling is typically lower for new homes.

Energy cost savings in new homes are primarily due to the amount of insulation required in newer construction and the higher efficiency ratings for newer mechanical systems.

Homes built prior to 1965 didn't require any insulation. Since then, insulation requirements for ceilings have progressed from 4-5 inches to up to 16 or 18 inches now. In some cases, the R-value or heat resistance rating has gone from R-15 all the way up to R-49. More than 3 times the insulation and a new high-efficiency heating or cooling system savings can go a long way toward making the total real cost of owning a higher priced home less than that of a lower priced, less efficient home.

Increased tax benefits can offset the cost of a more expensive new home.

If you are eligible to itemize your tax returns, and many homeowners are, a larger mortgage amount also can mean more tax deductibility on interest paid. This can further reduce the real cost of owning a new vs existing home.

Bottom Line:

It's easy to see that the combination of savings from having little to no maintenance requirements, low energy costs, and potential tax savings can equate to both a lower cost of ownership and a far more enjoyable and comfortable way of life in your new home.

Is the tide turning for the housing market? 

If 2023 saw homebuyers and sellers mostly treading water against waves of rising interest rates, 2024 has them preparing to swim into calmer waters.

What happened?

• Inventory rose but was still low. After stalling in the first quarter of 2023, the inventory of homes for sale continued an upward trajectory. November's inventory was about two-thirds of November 2019's level.

• Rates climbed to multi-decade highs. Pressured by Fed policy rate hikes and high inflation, mortgage rates continued their ascent. They reached their highest point in October.

• Price growth slowed. The inventory shortage pushed prices higher, though at a slower pace than in 2022. Homeowners continued to benefit from the market with increases in equity.

What's ahead in 2024?

If there's one thing we’ve learned from the last several years, it's that predictions are fallible. Here's what we can say with confidence.

• Rates will likely fall. As inflation cools, the Fed has indicated it will cut policy rates, which influence mortgage rates.

• Lower rates could lead to an uptick in price gains. Lower rates and improved affordability typically bring more buyers to the market. If potential home sellers stay out of the market, inventory shortages could bring back bidding wars, and prices could start rising faster.

Are you waiting for rates to fall before making a move?
Waiting too long could mean that price increases will offset the advantage of lower rates. Those who purchase a home now may gain the advantage of a better price with the ability to refinance later if rates drop.

Bottom Line:

The Greenway Team is here to help with any questions or home financing needs you may have. The offer extends to your friends, family and co-workers, too. Your referrals are always welcome and greatly appreciated.

Did know your first house could pay for itself?

Here are 6 reasons to make your first home a multifamily property.

1. Collecting rent for the unit(s) you will not occupy can go a long way to subsidizing, if not sometimes even covering, your monthly loan payment.

2. The portion of the property that is rented can be depreciated. This lowers your tax liability on the rental income.

3. Expenses for maintenance and repairs can also be deducted for the rented portion of the property.

4. You may be able to purchase a more expensive property. Over time, this may provide a larger accumulation of equity than a lesser priced property.

5. New guidelines have made it easier to purchase an investment property as an owner-occupant than as an investor. Down payment requirements are as low as 5%. To expand credit availability and access to affordable rental housing, Fannie Mae has relaxed the down payment requirements for owner-occupants on purchase and basic refinance loans for multifamily homes.  

Here's what you need to know:

• Past requirements of 15% and 25% are being changed, and you can now purchase a two-, three- or even four-family home as an owner-occupant with as little 5% down.
• This change takes effect for loans closing after November 18, 2023.

Applies To: 

• Regular Conventional Loans
• HomeReady Loans for low-income buyers
• HomeStyle Renovation Loans that combines purchase and rehab costs
• Not available for high balance loans

Click here to learn more about this change.

6. If you later decide to purchase and move to a single-family home, you can own the property purely as an investment. This is one of the easiest ways to become a real estate investor.

Reach out when you're ready, and we'll help you discover the benefits of a multifamily purchase for your scenario!

Is owning a home one of life’s big goals or is renting just fine?

In case you’re still deciding let’s see how they compare.

Many say renting accommodates a more flexible lifestyle and owning works for more settled lifestyles.  The truth is either can cost you if you need to move quickly.

Rent vs Own: The Differences 

Renters may have to pay to break a lease and owners may lose funds if they sell too soon. Renters may have freedom from maintenance chores like yard work or shoveling snow. If the water heater breaks or the roof leaks, they need only to call the landlord for a fix.

On the other hand, owners have the freedom to do as they please. From decorating to remodeling to welcoming pets without asking for permission from the landlord.

Renting is often considered more affordable than owning. The security deposit and first month’s rent typically required for a rental can be less than the downpayment and upfront costs for a home purchase. And average rent may be lower than the average monthly mortgage payment in some markets, though it is higher in many.

A home purchase may require more expendable funds for the transaction costs and ongoing expenses. However, the real cost of owning is typically less than the monthly payment for several reasons:

• A portion of your payment is principal which reduces your loan balance and adds equity back to your home.
• The interest you pay is part of a fixed rate loan payment that goes down each month.
• Interest and real estate taxes can be deductible which may reduce your income taxes.

Compare the Costs & Benefits of Renting and Owning

Our Renting vs Owning Calculator will show you how the costs and benefits might compare for your scenario.

When deciding keep in mind these key reasons why so many Americans continue to value homeownership. Let’s take a look at some financial benefits and non-financial benefits to owning a home.

Learn about the financial benefits and non-financial benefits of homeownership here.

Bottom Line:

Overtime, owning a home can pay back all the costs invested and then some. A rent payment can only do the same for the landlord. If homeownership sounds good but you’re concerned about limited cash to close, credit challenges, or uncertainty about the process we’re here to help. Please reach out when you’re ready to take the next step!