How Scary is the Housing Affordability Index? Are Buyers Getting Priced Out of the Market?

Some industry pundits are saying that the housing market may be heading for a slowdown. One of the data points they use is the falling numbers of the Housing Affordability Index, as reported by the National Association of Realtors (NAR).

Here is how NAR defines the index:

“The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national level based on the most recent price and income data.”

Basically, a value of 100 means a family earning the median income earns enough to qualify for a mortgage on a median priced home, based on the price and mortgage interest rates at the time. Anything above 100 means the family has more than enough to qualify.

The higher the index the easier it is to afford a home.

Why the concern?

The index has been declining over the last several years as home values increased. Some are concerned that too many buyers could be priced out of the market. Here is a snapshot of the index since 2009:

But, wait a minute…

Though the index has decreased over the last four years, we must realize that at that time there was an overabundance of housing inventory and as many as one out of three listings was a distressed property (foreclosure or short sale). All prices dropped dramatically and distressed properties sold at major discounts. Then, mortgage rates fell like a rock.

The market is recovering and values are coming back nicely. That has caused the index to fall.

However, let’s remove the crisis years and look at the current index as compared to the index from 1990 – 2008. We can see that, even though prices have increased, historically low mortgage rates have put the index in a better position than every year for the nineteen years prior to the crash.

Bottom Line

The Housing Affordability Index is in great shape and should not be seen as a challenge to the real estate market’s continued recovery.

Is the Real Estate Market Going to Crash? 4 Stats That PROVE This Is NOT 2005 All over Again

4 Stats That PROVE This Is NOT 2005 All over Again

Recent research by realtor.com examined certain red flags that caused the housing crisis in 2005, and then compared them to today’s real estate market. Today, we want to concentrate on four of those red flags.

1. Price to Rent Ratio
2. Price to Income Ratio
3. Mortgage Transactions
4. House Flipping

All four categories were outside historical norms in 2005. Home prices were way above normal ratios when compared to both rents and incomes at the time.

They explained that mortgage transactions as a percentage of all home sales were also at a higher percentage:

“Loose credit was one of the main culprits of the housing crisis. Mortgage lending expanded dramatically as unhealthy housing speculation reached its peak and was met by the highest level of credit availability as measured by the Mortgage Bankers Association. The index measures the overall mortgage credit condition by the share of home sales financed by mortgages. This metric does not capture credit quality, but it does set a view of the importance of financing in supporting the housing market.”

House flipping was rampant in 2005. As realtor.com's research points out:

“Heightened flipping activity is a clear indication of speculation in the real estate market. A property is considered as a speculative flip if the property is sold twice within 12 months and with positive profit. Flipping is a normal part of a healthy housing market. In an inflated housing market, expectations about short-term profit from pure price appreciation are very high; therefore, the level of flipping activity would show evidence of being heightened.” 

Here are the categories with percentages reflecting the unrealistic ratios & numbers of 2005 as compared to the current market. Remember, a negative percentage reflects a positive gain for the market.

Bottom Line

They say hindsight is 20/20… Today, experts are keeping a close watch on the potential red flags that went unnoticed in 2005.

Older Millennials are Buying Homes!

Contact me today to list your home!  We have buyers looking in Northern Ohio!
Lee Hisey 440-315-6000 or LeeHisey@howardhanna.com
www.HiseyGroup.com

Purchasing a New Home? Here is a list of items needed for your loan application.

Before you start searching for that new home you should always first get a pre-approval.  It should be free, and they can make things much easier when you start your home search.  When you first meet with your Hisey Group, Howard Hanna agent bring it with you.

Now you've found your perfect home.  What will you need when applying for your mortgage?

Bring the following:

1. Fully executed purchase agreement, including ALL addenda.  Fully executed means that it has been accepted by both parties, and everyone has signed off on the terms.
2. The application fee for your appraisal and credit report.
3. Your most recent pay stub showing year to date earnings.  Yes - if you have more than one job bring them all.  Yes - if more than one person is applying for the loan you will all need to bring all of your pay stubs : )
4. All pages of your most recent 401k, IRA and/or retirement statements.
5. Your past two years W-2 forms and federal tax returns.  
6. Prior two months statements for savings, checking and investment accounts.  Bring all pages, not just a page with totals.
7. Photo I.D. and Social Security Cards for everyone applying for the loan.

You may also be required to bring the following:

• Past year's cancelled checks for mortgage or rent payments.
• Documentation of all outstanding loans, lines of credit, credit cards or any other outstanding debt.
• Documentation of other income sources that you would like to have considered in the repayment of your loan.
• You may be required to provide full copies of the following (if applicable):
• Divorce Decree
• Bankruptcy Petition and Discharge
• 12 Month print out of child support.
• 
  

If you are ready to move to the next step in your North Central Ohio home search contact me today at 440-315-6000 or LeeHisey@howardhanna.com.  

www.HiseyGroup.com

Howard Hanna Now Translates Website in 100 Languages

Working hard to be all inclusive - Howard Hanna continues it's efforts to serve everyone in our market areas, not just those that are convenient.



Read the full blog article:  Howard Hanna Now Translates Website in 100 Languages

Island Hopping Ohio's Lake Erie Islands - A great way to spend a week or a weekend!

Can you visit more than one island by passenger ferry?  Yes, you can! 

What a fun way to spend a day, weekend or a week. 

The Goodtime II has an island cruise that lets you enjoy time on both Kelleys Island and South Bass Island.  It leaves Sandusky, takes you to Kelleys Island so you can visit the quaint downtown.  From Kelleys Island you'll be taken to the village of Put-in-Bay on South Bass Island where you can enjoy the village walking or rent a bike or golf cart and explore the entire island.  The Put-in-Bay Chamber of Commerce, of which we are proud members, has a great website that lists many of the restaurants, gift shops and activities.  The Jet Express will take you back to your home port when you've finished your day.

The Jet Express can take you from the mainland to Kelleys Island and Put-in-Bay on South Bass Island, and then back again,  You have a little more control of your schedule if you want to spend more time on Kelleys Island or explore some of the other islands.  

You can also take the Kelleys Island Ferry from the mainland, catch the Jet Express to Put-in-Bay on South Bass Island, and then hop it back to Kelleys Island where you can take the Kelleys Island ferry back to the mainland where you started.

Another trip option is to take the  Miller Ferry to South Bass Island and then hop a bus to the north end of the island where you can catch the Sonny S to Middle Bass Island or the Jet Express to Kelleys Island for a day trip.  Make a week of it and explore all three!  When you are done exploring simply go back the way you came.

Want to visit another island as part of your adventure?  Take a tour of Ohio State Universities Gibraltar Island located between South Bass Island and Middle Bass Island.

If you can live out of a backpack or carry-on you can have a great adventure visiting Ohio's Lake Erie Islands.  Take some time to explore one of Ohio's greatest treasures.

After you've fallen in love with our Lake Erie Islands, give me a call at 440-315-6000 or shoot me an email at leehisey@howardhanna.com.  My team would be happy to help you explore real estate opportunities along North Central Ohio's Island, River and Shore communities.  We love our region and we are convinced you will as well.

Another beautiful day on Lake Erie.

Loving the Lake Erie Lifestyle!

Living the Lake Erie Island Life: Middle Bass Island, Kelleys Island, Put-in-Bay & South Bass Island

With the exception of a rare summer visit here and there I did not get to spend my childhood days on Ohio’s Lake Erie Islands.  I was blessed with many, many summer days on another great island – Manitoulin Island in Ontario, Canada.  What a wonderful experience that was at my grandfather’s camp along the shores of the North Channel.  I have so many great memories of playing along the shoreline, long hikes with my “Island Friends”, and trips into town. 

Ohio’s Lake Erie island life is very similar.  Most of the residents are seasonal, but there are true islanders that live on the islands as full time residents.  Even most of the full time residents enjoy long vacations in warmer climates during the winter months.  Most of them will admit that their favorite time on the islands is when the tourists are fewer in number and they have time to enjoy the simple things.

Each island has its own personality.  There is a unique culture and social dynamic.  Kelleys Island, South Bass Island with the village of Put-in-Bay, North Bass Island (Isle Saint Geoarge) and Middle Bass Island are all different and unique.  There are also residents on private islands to include Rattlesnake Island, Sugar Island and Ballast Island.  Pelee Island, our Canadian neighbors to the north, also have their own small town traditions and social network.

If you’d like to find that small town atmosphere where children still ride their bikes, people walk for relaxation and fishing is a popular past time contact me today.  That life still exists as the perfect place to retire, spend summers or just start a new life.  Snow birds that spend their winters in the south and their summers on the islands are common, as are increasing numbers of young professionals that want to get away from the rat race on their weekends. 

Within hours you can come from Cleveland, Columbus or Toledo and be standing on one of the great state of Ohio’s islands, enjoy a weekend, and be back for work on Monday.

Most people find the ferry ride part of the journey to be the break they need to change their mindset from being stressed to being relaxed.  If you are not a boat person, consider one of Ohio’s amazing lakefront and riverfront communities.  The lovely communities of Vermilion, Huron, Port Clinton, Johnson’s Island and Catawba Island are just some of the places you should explore.  Each of those communities are filled with unique neighborhoods.

Contact me today!  Let me put you in touch with one of our specialists who can walk you through the process of discovering your new life. 

Lee Hisey, Team coordinator with the Hisey Group, Howard Hanna

440-315-6000 or LeeHisey@howardhanna.com

www.HiseyGroup.com

“Serving Cleveland to the Lake Erie Islands”

Real Estate Marketing – What makes the difference in selling your home in Northern Ohio?

Realtors are still overwhelmingly the number one resource people use to buy and sell real estate. 

How does using a real estate agent make a difference when selling a home?

Having a third party to negotiate on your behalf, using someone that understands the paperwork and risks involved, and the experience of using someone with many transactions under their belt are all benefits.  I think one of the greatest benefit is in the area of marketing.

Giving your home maximum visibility in today’s marketplace is a real art.  Reaching the specific target markets that may be primed to purchase a home like yours takes experience and being a part of networks and systems that are already in place.  Many of these outlets like social networking and specialty websites can take years to develop or require an expenditure of funds that may not be viable for someone with only one listing. 

My team markets our listings in many ways. 

• We belong to specialized waterfront listing websites. 
• We advertise directly to other agents through email blasts. 
• As of this writing our Facebook pages total over 10,000 followers with two of them based on geographic areas, one on real estate and our team, and one on a niche market.  They continue to grow at a rapid pace. 
• We market through Howard Hanna, our broker’s website and the number one company website in our market area. 
• Property tours are becoming very, very important.  You need one that places above the pack!
• We also have a blog (obviously), video channels, a Twitter account, a Google+ account and other marketing resources. 

Are you really going to do all that for one listing? 

Contact me today and let my team go to work for you! 

Lee Hisey, Team Coordinator for the Hisey Group with Howard Hanna

440-315-6000 or RealEstate@HiseyGroup.com

http://www.HiseyGroup.com

“Serving Cleveland to the Lake Erie Islands”