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Homeownership Still a Desire; Not Necessarily a Reality

April 2, 2014
Home Buyers

Desire for homeownership is growing once again, but that doesn’t mean it will happen for many aspirational buyers.

While some renters are perfectly content to pay a monthly fee for their housing and have maintenance and upkeep taken care of by a landlord, a recent study has shown that the housing market collapse of the late 2000s has not dampened overall aspirations for homeownership.

CNN discusses a new study in a recent article about renters increasingly wanting to become homeowners.  Based on a Zillow survey, more than 5% of residents in 19 of 20 major metro areas expressed the desire to become homeowners – and soon.  The survey focused on those hoping to purchase their first homes in 2014.  While the increasing desire is a good sign for the housing market’s continued recovery, it’s unlikely that many of these residents will get their wish anytime soon.

Since the crash, the landscape of the housing market is much different than it once was.  It remains very difficult to be approved for a loan and mortgage rates have been steadily increasing.  For example, the rate of a 30 year fixed mortgage has increased almost an entire percentage point since this time in 2013.  The CNN piece cites an interesting statistic: those looking for mortgages on a $200,000 home will be paying about $90 more per month than they would have last year.  While that may not seem like a whole lot, for homeowners on a budget, it could be the dealbreaker.

The other issue many prospective homeowners are running into is stringent rules about credit scores, proof of income, proof of steady job history, and higher down payments.  In many cases, homeowners will have to put down almost 20% to secure a mortgage they can actually afford to pay.

Unfortunately for the 4.2 million people who desire to become homeowners this year, these may prove insurmountable obstacles, at least for now.

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From → Gary Richetelli

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