Low housing inventory? Reno to the rescue
With mortgage rates at or near historically lows, now should be an ideal time to purchase a new home. But one stubborn problem is throwing a wrench in many a homebuyer’s plans: low inventory. But never fear—renovation loans offer unique and timely benefits to both potential homebuyers as well as current homeowners. Below we explore the current market, as well as the ways a renovation loan can help those looking to purchase or refinance.
Housing inventory: Historically low levels
While trending downward for the last couple years, housing inventory will hit historic low levels in 2020. The nation’s inventory of homes for sale fell 19.7% annually to 1.47 million units for sale at the end of April, which marks the lowest April inventory figure ever.
How it affects first-time homebuyers
While low inventory drives up demand (and prices) across the entire real estate market, the trend is especially harmful to first-time homebuyers. As of January, the supply of properties priced under $200,000 fell 19%, while homes priced $200,000 to $750,000 declined 12%.
Inventory and coronavirus
The trend also doesn’t seem likely to change with the start of the summer market, since many sellers are taking a wait-and-see approach towards listing their home amid coronavirus uncertainty, which likely means low inventory is here to stay for a while.
Renovation to the rescue!
While stubbornly low inventory is driving up demand in many markets, renovation loans offer homebuyers flexibility and new purchasing options. By including the cost of renovations into their mortgage, potential homebuyers can widen the number of homes they might be looking at, allowing them to purchase a fixer-upper that matches their price point or desired neighborhood. Existing homeowners can also take advantage of renovation loans, and use historically low mortgage rates to refinance and make improvements that to help improve energy efficiency, lower utility bills, and potentially increase property value.
How to get started
Though current conditions might be constrained by low inventory, renovation loans can help you envision a home’s true potential, and transform any house into your dream home. If you’re interested in exploring how a renovation loan could help you, speak to one of our experienced loan officers to learn more and explore your options.
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