Washington County Weekend Post

Despite the devastation wrought on the economy by the pandemic, no sector has recovered and entered a boom faster than real estate, specifically single-family homes. While the market suffered in the early days of the pandemic, it quickly rebounded as the lockdowns ended and the country returned to business under restricted conditions. In its remarkable forward momentum, real estate has even managed to sidestep the sort of troubles experienced by the labor market and other sectors of the economy. Record home sales Not since the early 2000s — when a housing bubble presaged the economic collapse of 2008-09 — have home sales risen so quickly, with pandemic-era markets set to overtake even those high-flying days. Those who have been able to endure the pandemic without a job loss or any serious damage to their personal wealth or credit are taking advantage of plunging mortgage rates with an eye toward long-term home ownership. Sales have also benefited from flight from urban centers into the suburbs, with many families fleeing certain states altogether since the benefits of an accelerated work-from-home movement — something that might have ordinarily taken 10 years or more to achieve — allows them to live anywhere they like. This has created home sales spikes in smaller towns and cities across America. Growth and interest has put a premium on existing home inventories, so builders have too been as busy or busier than at any time since the previously mentioned housing bubble. Demand is far outpacing supply, and builders are racing to keep up. This, of course, has caused home prices to rise dramatically, far above 2019 across the U.S. It's a remarkable turnaround from a time when agents worried they might not be able to effectively show homes because of the safety precautions instituted to curb the spread of the virus. Inequity apparent The downside to all this activity is that while the market has benefited from those who remain relatively unaffected by the economic instability, those who have lost their jobs have also lost their homes. Renters face evictions and low- income families, especially those in minority communi- ties, have suffered dispro- portionately. Will it last? According to an analysis by J.P. Morgan, while the housing market has cooled somewhat since it's extraordinary gains during the summer of 2020, the bank sees a sustained level of interest in real estate continuing into 2021. Actions taken by Congress and the Federal Reserve to support the economy, along with the promise of widespread vaccination by the spring and summer bode well for real estate. A continued shortage of new home inventory as builders catch up will benefit sellers, but buyers also benefit from relatively low mortgage rates. Those seeking to refinance can also take advantage of lower rates. While the economic headwinds of a winding down pandemic under a new presidential adminis- tration are hard to predict, most experts agree real estate will continue to enjoy gains well into the new year. © ADOBE STOCK Post-pandemic real estate 2B • WASHINGTON COUNTY POST • SUNDAY, JANUARY 24, 2021 GMTODAY.COM REAL ESTATE Place your ad 24/7 @ www.gmtoday.com/classifieds Southeast Wisconsin For assistance call 262.306.5000 or conleyclass@conleynet.com At a time when the strength of the U.S. economy and personal finance is on most renters' minds, low down payment mortgage options are more appealing than ever. With mortgage interest rates being at historic lows, it is possible to qualify for a home loan while keeping a rainy day fund. Private mortgage insur- ance (MI) has been around for decades and helped over 1.3 million homebuyers last year. It is a temporary cost that allows for a down payment as small as 3% of the purchase price. While some borrowers wait until they save 20% for a down payment, the added years of saving can translate to higher interest rates and more expensive home prices. "Renters who are on the hunt to buy should do the math and consider what is best for them, because many times they will find that buying with a low down payment insured mortgage is in their best interest. It may enable them to attain homeownership sooner than they otherwise could, which helps them take advantage of historic low rates and keep some of their savings intact," said Lindsey Johnson, President of U.S. Mortgage Insurers (USMI). If you are one of these renters looking to buy your first home but don't have 20% down, don't worry, you are not alone. According to the National Association of Realtors, the median down payment in 2019 was 6% for first-time buyers. It is true you can qualify for a conventional mortgage with a down payment as small as 3% of the purchase price. In today's market, it could take a family earning the national median income up to 21 years to save 20%, according to calculations by USMI. How can buying now save you money later? Consider you want to purchase a $275,000 home. When you account for closing costs (about 3% of the sales price), a 5% down payment is $13,750 versus $63,250 in cash for 20% down. With a 740 credit score at today's MI rates, your monthly MI payment would be about $115, which is added to your monthly mortgage payment until the MI can be cancelled. MI typically cancels after five years. With home price apprecia- tion, today's $275,000 home will likely cost more in the years ahead. This will also have an impact on the necessary down payment and length of time required to save for it. There are other variables in the equation too, such as interest rates. As interest rates rise, so too will the cost of mortgage financing. Not all MI is the same. Importantly, so-called "FHA Loans" are government- backed loans insured by the Federal Housing Adminis- tration versus a private insurer. These mortgages require a slightly higher down payment, the insur- ance is permanent, and the monthly premiums general- ly cannot be cancelled. Make sure you do the math. There are many online mortgage calculators that can help. Check out lowdownpaymentfacts.org to learn more. Do the math: Buying a home now may be more affordable and save some cash

• Cover