Even with the FHA low downpayment program, the downpayment is the biggest block to the homeownership
For 30 years of pushing a consumer driven economy, now we don’t have buyers with downpayments. In addition, the FHA program is bankrupt, so that program might not be around much longer.
IRR: Down Payment Biggest Obstacle to Homeownership
06/08/2012 By: Tory Barringer
Feelings about homeownership remain positive in the face of a diminished market, but an uncertain economy and increasing down payments are keeping Americans from making purchases, a report from Integra Realty Resources (IRR) said.
Wednesday’s report detailed results from an IRR-commissioned survey of non-homeowners ages 22-50 in 11 major markets. While 85 percent of potential buyers indicated that market conditions are favorable for purchasing a home, unemployment and job instability make many respondents reluctant or unable to buy a home.
According to the study, 21 percent of respondents are not planning to buy a home due to an uncertain economic outlook, while 24 percent are afraid of making a bad investment. Thirty-one percent are not planning to buy a home because of a lack of a down payment. As banks and lenders have become more stringent, down payments have escalated to a point where many Americans can’t afford to make the investment.
North Tustin Overview
| Median home price is $702,000. Based on a rental parity value of $673,000, this market is fairly valued. |
| Monthly payment affordability has been worsening over the last 3 month(s). Momentum suggests worsening affordability. |
| Resale prices on a $/SF basis declined from $274/SF to $274/SF. |
| Resale prices have been falling for 12 month(s). Price momentum suggests falling prices over the next three months. |
| Median rental rates increased $33 last month from $2,757 to $2,791. |
| Rents have been falling for 3 month(s). Price momentum suggests unchanging rents over the next three months. |
| Market rating = 1 |
Proprietary OC Housing News home purchase analysis 
10706 EQUESTRIAN Dr North Tustin, CA 92705
$850,000 …….. Asking Price
$740,000 ………. Purchase Price
1/30/2003 ………. Purchase Date
$110,000 ………. Gross Gain (Loss)
($59,200) ………… Commissions and Costs at 8%
============================================
$50,800 ………. Net Gain (Loss)
============================================
14.9% ………. Gross Percent Change
6.9% ………. Net Percent Change
1.5% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$850,000 …….. Asking Price
$170,000 ………… 20% Down Conventional
3.80% …………. Mortgage Interest Rate
30 ……………… Number of Years
$680,000 …….. Mortgage
$164,233 ………. Income Requirement
$3,169 ………… Monthly Mortgage Payment
$737 ………… Property Tax at 1.04%
………… Mello Roos & Special Taxes
$213 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$125 ………… Homeowners Association Fees
============================================
$4,243 ………. Monthly Cash Outlays
($723) ………. Tax Savings
($1,015) ………. Equity Hidden in Payment
$217 ………….. Lost Income to Down Payment
$126 ………….. Maintenance and Replacement Reserves
============================================
$2,848 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$10,000 ………… Furnishing and Move In at 1% + $1,500
$10,000 ………… Closing Costs at 1% + $1,500
$6,800 ………… Interest Points
$170,000 ………… Down Payment
============================================
$196,800 ………. Total Cash Costs
$43,600 ………. Emergency Cash Reserves
============================================
$240,400 ………. Total Savings Needed
——————————————————————————————————————————————-
This property is available for sale via the MLS.
Please contact Shevy Akason, #01836707
949.769.1599……
sales@ochousingnews.com…..
We're sorry, but it seems that we're having some problems loading MLS # P824718 from our database. Please check back soon.
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$850,000 - |
0.22 miles 4 bd / 2 ba 2,870 Sq. Ft. |
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$934,000 11021 CORONEL Rd |
0.43 miles 4 bd / 2.75 ba 2,800 Sq. Ft. |
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$1,225,000 1692 SIRRINE Dr |
0.58 miles 4 bd / 2.5 ba 2,741 Sq. Ft. |
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$739,000 11161 ARROYO Ave |
0.65 miles 4 bd / 2.5 ba 2,784 Sq. Ft. |
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$920,000 2540 REYNOLDS Dr |
0.99 miles 4 bd / 2.75 ba 2,700 Sq. Ft. |
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$799,000 2550 HORTON Dr |
1 miles 4 bd / 2.75 ba 2,100 Sq. Ft. |
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$925,000 2580 THORMAN Pl |
1.01 miles 5 bd / 3 ba 2,732 Sq. Ft. |
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$578,000 331 South NOTRE DAME St |
1.02 miles 3 bd / 2 ba 2,000 Sq. Ft. |
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$669,000 6434 East KINGS CROWN Rd |
1.08 miles 4 bd / 2.5 ba 2,612 Sq. Ft. |
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$739,000 194 South TERRACE Rdg |
1.11 miles 4 bd / 3 ba 2,700 Sq. Ft. |
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Consumer sentiment is down because without HELOC money, many Ponzis can’t live the lifestyle they want, and despite the hoopla about the housing market bottoming, most Ponzis don’t believe the housing ATM machine will be turned on soon. The fact that most economists don’t see a connection between the housing ATM and consumer sentiment shows how clueless they are.
Consumer Sentiment Index Makes Steep Drop, Economists Respond
Following reports that the Reuters/University of Michigan consumer sentiment index had fallen significantly from 79.3 in May to 74.1 in June, economists offered commentary on the meaning behind the numbers. In addition to the consumer sentiment index, the current conditions index reportedly fell from 87.2 in May to 82.1 in June, while the expectations index declined to 68.9 this month from 74.3 the month before.
A breakdown
“This is not a good report. Consumer confidence is back in recession territory. The news from the retail sales report is clearly indicating that consumers are cautious and holding back….The Reuters/University of Michigan consumer sentiment index fell in mid-June to its lowest level since
December. Consumers are more pessimistic across the board. A considerable deterioration on job prospects and household net worth are taking their toll on consumer mood.”
Yinbin Li, IHS Global Insight Principal Economist
“The negative impact on sentiment from the pull back in stock markets in the last two months, driven by the turmoil in Europe, outstripped the positive from the sharp fall in gasoline prices. The recent slowdown in job creation and the continuous uptick in the weekly jobless claims figures has cast a cloud on the strength of the overall recovery. The drop back in the headline index was the first in nine months and was in line with the recent falls in other consumer confidence indices.”
Amna Asaf, Capital Economics Economist
On the upside
“The one piece of good news is that pump and food prices have fallen. Falling gasoline prices offered positive support for the Reuters/University of Michigan consumer sentiment index in April and May.”
Li, IHS Global Insight
Looking ahead
“IHS Global Insight is now forecasting consumer spending (adjusted for inflation) to grow 1.7% in the second quarter, significantly lower than the first quarter’s 2.7% gain.”
Li, IHS Global Insight
The point here is well made and timely. If “slices” of the buyer market go missing one at a time, then eventually, that’s going to have dramatic impact. Some of these “slices” are: fewer marriages by far, later marriage, fewer children in the likely homeowner class, trapped middle-tier underwater owners (who have no downpayment net of sale and moving expense), those already foreclosed on with bad credit, couples where even one spouse has lost or is threatened with losing their job. It adds up. Idle query: with the present $$$$ lobbying money of the Realtors (second biggest business brib…lobby), one can wonder if these studies are a lead up to yet one more cash credit against taxes at public expense. The conditions in Orange County north may be different, of course, than these national surveys show. Also, the banks tightening inventory may be a run-up to their KNOWING that the market will surge in price if that tax credit is revived, and, after all, it’s an election year! (although one can also wonder if the banks are trying to jump property values right before they dump their inventory…without a broker…by selling the actual loans in bulk). Suspicious mind.