Curious how America Mortgages qualifies a foreign national or U.S. expat borrower for a U.S. mortgage loan while living abroad? We\u2019ll explain this at the end of the article. Stay tuned.<\/p>\n\n\n\n
Key takeaways from this week’s Bankrate article:<\/p>\n\n\n\n
Much to the chagrin of would-be homebuyers, property prices just keep rising. It seems nothing \u2014 not even some of the highest mortgage rates of the past two decades \u2014 can stop the continued climb of home prices.<\/p>\n\n\n\n
Prices increased once again in February, according to the National Association of Realtors (NAR), which reports that median existing-home prices<\/a> were up 5.7 percent over last year \u2014 the eighth month in a row of year-over-year jumps. In another reflection of ongoing increases, the S&P CoreLogic Case-Shiller home price index<\/a> for January was up 6 percent from a year earlier.<\/p>\n\n\n\n So much for the idea that a \u201chousing recession\u201d would reverse some of the outsized price gains in homes. The U.S. housing market had finally started slowing in late 2022, and home prices seemed poised for a correction. But a strange thing happened on the way to the housing market crash: Home values started rising again.<\/p>\n\n\n\n “Prices will remain firm and will not decline on a national level.” – Lawrence Yun, Chief Economist, National Association Of Realtors<\/p>\n\n\n\n NAR data shows that median sale prices of existing homes are near record highs. February 2024\u2019s median of $384,500 is off the all-time-high of $413,800, but it\u2019s the highest February median on record. (Seasonal fluctuations in home prices typically make late spring the highest-priced time of the year \u2014 the all-time-high was reached in June 2022.)<\/p>\n\n\n\n Home prices have also risen more quickly than wages, a reality that intensifies affordability challenges, says Lawrence Yun, NAR\u2019s chief economist. \u201cAny time home prices outpace people\u2019s incomes, that is not good,\u201d Yun told reporters recently. The result is a squeeze on first-time buyers \u2014 but repeat buyers can rely on gains from the housing market and their stock portfolios to finance purchases, Yun said.<\/p>\n\n\n\n Home values held steady even as mortgage rates soared to 8 percent in October 2023, reaching their highest levels in more than 23 years. (They have since dipped, falling briefly below 7 percent before averaging 7.05 percent in Bankrate\u2019s weekly survey released April 3.) The main culprit is a lack of housing supply<\/a>. Inventories remain frustratingly tight, with NAR\u2019s February data showing only a 2.9-month supply.<\/p>\n\n\n\n \u201cYou\u2019re not going to see house prices decline,\u201d says Rick Arvielo, head of mortgage firm New American Funding. \u201cThere\u2019s just not enough inventory.\u201d<\/p>\n\n\n\n Skylar Olsen, chief economist at Zillow, agrees about the supply-and-demand imbalance. Her recent forecast says home prices will keep rising in 2024 \u2014 welcome news for sellers but not so great for first-time buyers struggling to become homeowners. \u201cWe\u2019re not in that space where things are suddenly going to be more affordable,\u201d Olsen says.<\/p>\n\n\n\n In fact, the trend is quite the opposite. According to Realtor.com\u2019s March 2024 Housing Market Trends Report<\/a>, high mortgage rates have increased the monthly cost of financing the typical home (after a 20 percent down payment) by 2.9 percent since last year. That equates to $63 more in monthly payments than a buyer last March would have seen.<\/p>\n\n\n\n Taking all this into account, housing economists and analysts agree that any market correction is likely to be a modest one. No one expects price drops on the scale of the declines experienced during the Great Recession.<\/p>\n\n\n\n Is the housing market going to crash?<\/p>\n\n\n\n No. There are still far more buyers than sellers, and that means a meaningful price decline can\u2019t happen: \u201cThere\u2019s just generally not enough supply,\u201d says Mark Fleming, chief economist at title insurer First American Financial Corporation. \u201cThere are more people than housing inventory. It\u2019s Econ 101.\u201d<\/p>\n\n\n\n Dave Liniger, the founder of real estate brokerage RE\/MAX, says the sharp rise in mortgage rates has skewed the market. Many would-be buyers have been waiting for rates to drop<\/a> \u2014 but if mortgage rates do decline meaningfully, it could send new buyers flooding into the market, pushing up home prices.<\/p>\n\n\n\n \u201cYou\u2019ve got an entire generation of pent-up demand,\u201d Liniger says. \u201cWe\u2019re in this fascinating position of tremendous demand and too little inventory. When interest rates do start to come down, it\u2019ll be another boom-and-bust cycle.\u201d<\/p>\n\n\n\n NAR\u2019s Yun notes that some once-hot markets, like Austin, Texas, have seen small declines in prices. But he sees little chance of falling prices on a broader scale. \u201cPrices will remain firm and will not decline on a national level,\u201d he said.<\/p>\n\n\n\n Key housing market statistics<\/p>\n\n\n\n Back in 2005 to 2007, the U.S. housing market looked downright frothy before home values crashed, with disastrous consequences. When the real estate bubble<\/a> burst, the global economy plunged into the deepest downturn since the Great Depression. Now that the recent housing boom has been threatened by skyrocketing mortgage rates and a potential recession \u2014 Bankrate\u2019s most recent expert survey<\/a> puts the odds at 33 percent \u2014 buyers and homeowners are asking, when will the housing market crash?<\/p>\n\n\n\n However, housing economists agree that it will not crash: While prices could fall, the decline will not be as severe as the one experienced during the Great Recession. One obvious difference between now and then is that homeowners\u2019 personal balance sheets are much stronger today than they were 15 years ago. The typical homeowner with a mortgage has stellar credit, a ton of home equity<\/a> and a fixed-rate mortgage locked in at a low rate \u2014 in fact, a December analysis by Realtor.com report found that two-thirds of all current mortgages had rates below the 4 percent mark.<\/p>\n\n\n\n What\u2019s more, builders remember the Great Recession all too well, and they\u2019ve been cautious about their pace of construction. The result is an ongoing shortage of homes for sale. \u201cWe simply don\u2019t have enough inventory,\u201d Yun says. \u201cWill some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.\u201d Existing home prices<\/strong><\/p>\n\n\n\n Economists have long predicted that the housing market would eventually cool as home values<\/a> become a victim of their own success. After posting a year-over-year decrease in February 2023 for the first time in more than a decade, the median sale price of a single-family home has been on the rise again, with a 5.7 percent annual gain in February, according to NAR. That represents the eighth month in a row of year-over-year increases.<\/p>\n\n\n\n Experts say prices to hold strong<\/p>\n\n\n\n While the housing market is indeed cooling, this slowdown doesn\u2019t look like most real estate downturns. Despite prices being high, the actual volume of home sales has plunged, and inventories are still too low to meet demand. Homeowners who locked in 3 percent mortgage rates several years ago are declining to sell \u2014 and who can blame them, with current rates more than double that? \u2014 so the supply of homes for sale is even tighter. As a result, the correction will be nothing like the utter collapse of property prices during the Great Recession, when some housing markets experienced a 50 percent cratering of values.<\/p>\n\n\n\n \u201cWe will not have a repeat of the 2008\u20132012 housing market crash,\u201d Yun said in a statement last fall. \u201cThere are no risky subprime mortgages that could implode, nor the combination of a massive oversupply and overproduction of homes.\u201d<\/p>\n\n\n\n Ken H. Johnson, a housing economist at Florida Atlantic University, says the housing market is being pulled in two competing directions. \u201cI think we are in for a period of relatively flat housing price performance around the country as high mortgage rates put downward pressure on prices, while significant demand from household formation and an inventory shortage place upward pressure,\u201d he says. \u201cThese forces, for now, should balance each other out.\u201d<\/p>\n\n\n\n 5 reasons there will be no housing market crash<\/strong><\/p>\n\n\n\n Housing economists point to five compelling reasons that no crash is imminent.<\/p>\n\n\n\n All of that adds up to a consensus: Yes, home prices are still pushing the bounds of affordability. But no, this boom shouldn\u2019t end in bust.<\/p>\n\n\n\n America Mortgages has one job, and we do it well. Market Rate U.S. Mortgage Loans for Foreign Nationals and U.S. Expats. <\/strong><\/p>\n\n\n\n Our AM FN Investor +<\/a> and AM U.S. Expat Mortgage +<\/a> are two specialized mortgage programs by America Mortgages for foreign nationals and U.S. expats investing in U.S. real estate.<\/p>\n\n\n\n AM FN Investor + offers a simplified income documentation process, ideal for foreign nationals seeking U.S. property investments, regardless of passport or credit history. <\/p>\n\n\n\n AM U.S. Expat Mortgage + caters to U.S. citizens abroad, allowing qualification with foreign income without needing a W2 or U.S. credit history. These programs streamline the mortgage process for investors living overseas.<\/p>\n\n\n\n AM FN Investor +:<\/strong><\/p>\n\n\n\n AM U.S. Expat Mortgage +:<\/strong><\/p>\n\n\n\n These programs aim to simplify the mortgage application process for foreign nationals and U.S. expats, making it easier for them to invest in U.S. real estate.<\/p>\n\n\n\n America Mortgages provides different types of mortgages designed specifically for Americans living abroad and foreigners\/non-U.S. residents looking to buy or refinance<\/a> properties in the U.S. <\/p>\n\n\n\n These mortgages offer 30-year fixed rates regardless of the borrower’s age. In addition to standard mortgages that include both principal and interest, we also offer a 10-year fixed interest-only mortgage, which can help with cash flow while providing the surety of a fixed rate payment. <\/p>\n\n\n\n If you\u2019re interested in learning more about these options, don’t hesitate to contact us at hello@americamortgages.com<\/a> or visit our website at www.americamortgages.com<\/a>. Additionally, if you\u2019d like to schedule a commitment-free meeting with one of our U.S. loan officers to explore your U.S. mortgage options further, you can do so using our 24\/7 calendar link<\/a>.<\/p>\n\n\n\n\n
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Overall, home prices have risen far more quickly than incomes. That affordability squeeze is exacerbated by the fact that mortgage rates<\/a> have more than doubled since August 2021.
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