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Spring 2015 Guide to House Prices BY CURTIS SCHARTZ, CMPS

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CERTIFIED MORTGAGE PLANNER

ouse prices are determined by housing supply, housing demand and housing affordability.

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F I R S T S TAT E B A N K M O RT G A G E

Housing Affordability: Can Buyers Afford Houses at Current Prices?

Housing Supply: What’s the Outlook?

Here is a chart illustrating the supply of homes for sale as reported by

the US Census Bureau. This chart illustrates how many months it would

take to sell all the houses currently listed for sale, at the current pace of home sales.

As you can see from the chart, housing supply hit a peak of 12 months

in 2010. On average, it took nearly a year to sell these homes likely with a

lower sale price due to the low demand. As the demand improved, housing supply went down steadily.

In 2014, the U.S. housing supply was relatively balanced at a 6-month

supply. Homes prices stabilized, while price increases leveled out from 2013 levels, when housing supply was closer to 4 months.

Today housing supply is 4.7 months on a national basis. This is

indicative of a seller’s market, and buyers are competing with multiple offers. This tells us that house prices could go up significantly in the next several months.

The National Association of Realtors publishes a “Housing Affordability

Index.” A value of 100 indicates a family with the median income has

exactly enough income to qualify for a mortgage on a median-priced home.

An index above 100 signifies that a family earning the median income

has more than enough income to qualify for a mortgage loan on a median-

priced home, assuming a 20 percent down payment. Today’s reading in the

170 range means that median-income families have 170% of the income

required to qualify for a mortgage.

As you can see from the chart, the housing affordability index was

generally between 70 and 110 in the 1980s. People were really struggling to afford houses!

In the 1990s, the affordability index was generally between 120 and 140.

Today’s reading in the 170 range shows housing to be VERY affordable by historical standards.

We expect the housing affordability index to go down from its current

level as house prices increase from current levels. ;

Conclusion: we anticipate prices to increase over the next several

Housing demand is usually created when:

Housing Supply: What’s the Trend?

months, housing supply to remain low, housing demand to increase, and

People have jobs and are employed

Real estate investors are optimistic about purchasing houses

homes to remain affordable for most buyers. Please contact me for a

spring 2015 as the job market and overall economy improves.

First State Bank Mortgage. He has well over a decade of experience. Realtors

G G G

Homebuyers are confident enough to purchase a home

We expect housing demand to increase from current levels through

specific solution to your situation.

Curtis Schartz is a Certified Mortgage Planning Specialist (CMPS) with

engage Curtis because he is creative, experienced, and passionate.

913-707-1525 KCMortgagePlanner.com Curtis@KCMortgagePlanner.com NMLS #454625

For free consultation and more information about mortgage loan programs, call Curtis at 913-707-1525. © 2015 CMPS I NSTITUTE . A LL R IGHTS R ESERVED.

LENDER

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