Appreciating Property Values in Florida
Buying and selling real estate is always a situation of a buyer and seller coming to terms on a final selling price. And there are so many factors that can affect such negotiations as well as the final sales price ranging from interest rates, geopolitical events to the environment. Rising economies also help to inflate prices of homes. Here are some ways that sellers can demand more for their homes and how borrowers can offset these challenges.
One of the primary reasons home prices not only hold their value but increase over time is the subject property’s location. If the home is located in a good public school district, that can put pressure on home prices. Being in a low-crime area also helps support property values. Or, being near business services, shopping and easy egress and ingress to employment can also help move property values higher.
Another reason home values increase in Florida is the widening pool of qualified buyers. As the economy continues to improve, more consumers have the ability to qualify for a home loan as well as meeting minimum employment histories. For example, most home loans require a minimum of two years of consistent employment. For someone who was unfortunately laid off for a period of time and then gets back into the workforce, most loan programs require a consistent two year history of employment. Any gaps during this period need to be explained and documented for most lenders.
One of the primary qualifying guidelines as it relates to income is for the lender to verify at two year history of employment as well as determine employment will likely continue into the future. Now that the economy appears to be back on the fast track, there are more eligible buyers bidding on a limited inventory of homes…a class example of supply and demand.
Lenders have also relaxed somewhat over the past few years and returned to a more “common sense” approach when evaluating a mortgage loan application. There was a time immediately following 2008 and into 2009 that it seemed almost no one could get approved for a home loan due to tightened lending guidelines. This general philosophy has changed over recent years and it’s much easier to qualify for a home loan than it was say just seven or eight years ago.
But even though home prices have been on the rise over recent years, that doesn’t automatically push people out of home ownership. For example, instead of buying a home and financing the property over say a 15 year loan term, financing over 30 years will lower the payment and help buyers more easily qualify. Recent changes in conventional lending guidelines also allow for higher debt-to-income ratios. Allowing for debt ratios to approach 50 instead of 45 will get more loans approved as long as the borrowers with higher debt ratios have a good credit history, employment and other positive factors. Just because home values are rising, that doesn’t mean consumers have to sit on the sidelines.
However, there are no indications home values nor interest rates will recede. In fact, the pundits say otherwise. And we know what that means…higher rates and higher prices will reduce buying power. If you’re thinking of buying, this might very well be the best time to get serious.