Should you wait to buy your Albuquerque home?

by | Aug 6, 2021 | Albuquerque Real Estate Talk | 0 comments

Should you wait to buy your Albuquerque home?

(Transcript Snippet): “Tego:

Tracy. We’ve got a great story and some data here about, should you wait to buy?

Tracy:

And the answer is it could cost you if you wait to buy. Right.

Tego:

So tell us the numbers on this. This is a little bit of research. It was done. Pretty simple research, but yeah, go, go through it

Tracy:

Here. You know, it’s talking about a $250,000 home loan. So we’re looking at the price of the home versus the cost of borrowing the money from now to historical, you know, like in the future, if interest rates change and prices continue to go up, which we believe they will.

Tego:

Yeah. So if you look at, if somebody bought a home in the beginning of this year in January and they pay $250,000 for it, they got a 2.8% mortgage. So they got a month monthly payment about 1,077 a month, right? If the home prices go up, which they look like they will about 12% this year, right?

Tracy:

That home next January will be 200, $280,250. Right? So that house is going to go up $30,000 in a year. Wow. And interest rates let’s look at it this

Tego:

Way. This may be a better way to look at it. If somebody would buy a $280,000 house right now, and let’s say, they’re close, they’re there around, you know, 3% mortgage rate or something like that. They’re going to have a payment around $1,200, let’s say. Right. Okay. All the projections are that home prices are going to appreciate somewhere around 5%. I think it’s going to actually be higher than that over the next 12 months, that home let’s say it’s 5%. That home that was 280 is now worth $295,000 a year later. So if you wait a year from now, you’re going to pay another $15,000 for that exact same home. And more than likely you’re going to be paying a higher mortgage payment. So you’re going to, because your interest rates more than likely will be up a little higher by the time, the same time next year.

Tracy:

So we’ve had a lot of people say, I’m just going to wait. I’m not, I’m not going to buy a house right now. I’m just going to wait for things to calm down prices to come down or whatever. So when you look at the statistics on it and the projections that really could cost a home buyer, especially for that, that whole

Tego:

Conversation that you and I have all the time about building wealth for you and your family.

Tracy:

So, you know, this example was a January, 2021 purchase. So just six months ago, right. Seven months ago. And it’s showing that that house has already appreciated by $15,000 perhaps. And what we know from working in the market and helping clients is houses have gone up quite a bit just since the first of the year. So to wait and wait for prices to go up higher and potentially miss out on the best interest rates we’ve seen pretty much could, could cost them money.

Tego:

What about all those forbearances in that foreclosure,

Tracy:

Foreclosure flood that’s coming Tracy. So we’ve got a lot of new data on that too. Right? So over our morning, coffee, tea goes always reading the stories, right? Yeah. And the story of this week was all about what’s going to happen with all the houses in forbearance, but think about how many houses are there in forbearance, Tigo from the height of this pandemic to today. Right? Right. We went from what five, 6 million make something clear. If people may not

Tego:

Understand this, they may have heard the, hear the word for Baron. So the forbearance is a, a program that was put in place to help people avoid foreclosure. I remember back when, when it first started and everybody was saying there’s 7 million or 5 million people on a forbearance, they’re all going to go to foreclosure. Well, th the whole idea of the forbearance program was to get people to avoid foreclosure, right. It was a way to let them put a pause on their mortgage payments because of the pandemic and then come out of it. So what’s happened. We started at 5 million, we’re down to under 2 million people in those plans right now in most of the people that have come off, those plans have just, you know, picked up payments, done some work out with their lender, or they they’re there. Honestly, there were a lot of people that did the plan that never used it. They’re out of the plan. There’s a lot of people that refinanced or did something else that are out of the plan. Right.

Tracy:

So now we’ve got under 2 million people still in the forbearance plan and the story you were telling me, I think it was FHF well,

Tego:

It was actually it was a story. It was a CFPB.

Tracy:

I know, I know

Tego:

FHA is a federal housing finance authority, which oversees Fannie and Freddie, and then CFPB consumer protection. So they’re the ones that are, that are, you know, pushing you know, helping people get through this you know, homeownership challenge. Right, right.

Tracy:

So they’re coming out with how people are going to get out of it, right. How they’re going to help people, but what happens to the folks that aren’t trying to help themselves get out of it. Right. Right. And that was really clear to me that if people are reaching out to their lender, if they are in forbearance or they’re trying to figure out a path, here’s the quote they’re going to be. Let’s see. I just found it.

Tego:

So this was a story in housing wire written by a gentlemen who is with a organization called Realty track. And they’re the largest company in the country that kind of deals with foreclosures that the data foreclosures and working through foreclosure. So anyway, you know, they’ve had no business in the last year. I actually,

Tracy:

So the quote or the,

Tego:

The whole idea was okay, of all these people that were in forbearance plans. And I mean, they’re going to be coming out of it. The foreclosure moratorium is going away.

Tracy:

Probably it is like today soon. Yeah. I think it is first. I think you’re

Tego:

Right. So, so what happens to all those people now, are we going to suddenly have this flood of foreclosures? Well know, here’s, here’s the quote. It says the CFPB has issued new servicing rules. And so what the services are, those are the ones that actually take care of the mortgage payments and in service service to mortgages. So when you make your payment on a mortgage, you’re paying it to a servicer just to define that rules providing even more safety net until January, 2022, for the balance of 2021 service will not only be, we’ll only be able to initiate foreclosures on loans, held on vacant and or abandoned properties loans where the borrower has been offered, but not qualified for loan modification loans, where the borrower has been unresponsive to service our outreach. And I want to go back to that. And loans were, let’s see, which were 120 days delinquent prior to March of 2020, which is kind of funny that, you know, all those people that were prior to the pandemic got their, their foreclosures put on hold to.

Tracy:

So if they were in the process 120 days, they were, they might get put back on the roster. So

Tego:

That little part in there that says, if they’ve been, if the homeowner has been unresponsive to service or outreach the servicers, again, the people that actually handle the mortgages and collect payments and process all that they’ve been doing tons to for outreach. I mean, if you go on any mortgage servicers website right now, the first thing you’re going to see is this big splash pop up that says, do you need assistance with your mortgage? Right? This is nothing like what happened in 20 2008. Right. Anyway.

Tracy:

So basically it’s saying if you’ve been trying and you’re cooperating and you’re communicating with whoever you pay your mortgage to, they’re not going to start a foreclosure there. They’re going to continue to figure out how to help you put back payments. Well, there there’s one little

Tego:

Caveat to that. And it says they’ve been offered, but not qualified for loan modifications, which means the thing is they’re going to do everything they can to help people modify their mortgage. If they need to it’s as much as putting all the payments, the end and making it a 40 year mortgage. Right.

Tracy:

We saw that we had to do the math 480 months. Yeah.

Tego:

So the, the end of this story is Tracy. There’s not going to be a flood of foreclosures.

Tracy:

No, there isn’t. And you know, with under 2 million people in a forbearance, even if all those came on the market, we probably need them on the market. Not that we want that to happen. If they

Tego:

All came on the market and they wouldn’t come on all at once, they would come in over

Tracy:

The next year or two. Yeah. The

Tego:

Projection I saw was maybe 300,000 foreclosures nationwide after we get through this forbearance. And everybody comes off of that nationwide. Really? That’s a drop in the bucket. When you think about the fact that there’s about 6 million homes a year sold in our country,

Tracy:

The other statistic, just to put it in perspective is of the, the under 2 million that are in the forbearance program represents about 3.9% of mortgages. Right? So that’s four out of a hundred.

Tego:

So even if all those what I want. Yeah, you’re right. No, the thing is, even if all those homes come on the market immediately, it’s not going to cause price, declines and less buyer demand, just vanishes for some crazy reason, which doesn’t seem to be in the cards with the millennial

Tracy:

General and think about how much home prices have changed since the beginning of last year. Those, those people in forbearance have equity in those homes. So

Tego:

Or discussion we wanted. But I I’m just so frustrated when I hear people say, well, I’m waiting for the deals. When all the deals start coming, it’s like, no, they’re not coming. They’re they’re not, I’m sorry. And people that say you shouldn’t be telling people to buy a home right now because home prices are going to crash. Well, first off you gotta live somewhere. Right. I mean, so you got to put that into the calculation anyway. Okay.