Financial trends play a major part in determining the standards lenders will apply in approving mortgage loans. However, other factors come into play, though to a lesser degree. Length of employment, savings history, debt to income ratio, age of debt, past repayment history, current income as well as income growth history all combine in the approval process along with the value of the property to be financed. Mortgage qualifying requirements are not a fixed element, so blanket statements of affordability in the housing industry are also not a given. Home prices and mortgage interest rates weigh heavily in determining whether securing a mortgage will be easy or difficult. However, these other factors do weigh in the decision, and these elements a buyer has some control over. We’ve spoken many times in past Insights about shifts taking place, shifts we see coming and shifts that may occur if A or B happens in the economic climate. Supply chain concerns, a more recent development, are affecting affordability, employment, and personal income, but to what extent that will shape lender requirements has not fully emerged yet. Almost 57% of homes sold in the first two quarters of this year were considered affordable, thanks to rises in personal income over last year. This made purchasing a new home a little easier for our Front Range Colorado residents. Even with the recent price and interest rate rises, of the 13,774 homes available for sale, 5,090 sold and closed during the month of June. These sales took place after an average of 9.5 Days on the Market (till an offer), and closing at an average sale price of $657,304. As buyers continue the trend of departing denser populated areas in favor of suburbs, year-over-year averages still see increases, which hopefully inspires sellers to enter the market in stronger numbers. June 2021 average Days on Market were 10.5, with an average sale price of $553,039 for the 6,666 sold and closed of the 10,952 that were on the market. Now that daily commutes are less of a factor in home-buying decisions, expect to see the shift away from inner-city and crowded suburbs remain on an upward trajectory. Attention to those financial considerations is still the best plan to bring home purchase dreams into focus. A debt-to-income ratio of about 28% settles you in a comfortable position of qualifying approval for a mortgage at the lowest available interest rates. There are considerations for first-time buyers and rates for those with less than stellar credit scores. Budgeting for those home buying aspirations is specific as every personal budget differs. Contact me with any questions you might have about the market today. I can help you begin this most exciting journey of home ownership!
