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The American dream of homeownership is facing its toughest test in a generation. With mortgage rates having only recently dropped from nearly 7%, home prices at record highs, and inventory limited, many would-be buyers feel boxed out of the market.
For first-timers in particular, the financial barriers to homeownership may seem insurmountable. Higher mortgage rates can add hundreds of thousands of dollars in interest over the life of a loan. Maintenance costs and insurance premiums are on the rise, and property taxes have ballooned since before the pandemic.
But it's not just the numbers that are shifting; it's the whole landscape of homeownership. Income requirements for borrowers are higher and stricter than they once were. And adjustable-rate mortgages no longer offer the same bargains.
Despite these challenges, buying a home right now can still be within reach. A wealth of opportunities and programs are available to help with financing and make homeownership more accessible. But they're often obscured in a maze of acronyms, government websites and red tape.
Knowing where to look for help can make all the difference. That's where a real estate professional comes in.
For instance, many buyers qualify for down payment assistance programs, which offer low-interest loans or grants to help with upfront costs. There are more than 2,000 of these programs across the country, including those offered by state, county and city governments.
Typically, purchasers who qualify for down payment assistance meet several criteria. For example, they may be first-time buyers, have low-to-moderate incomes and acquiring a primary residence. Beyond those requirements, each program has its own eligibility rules and application processes. And each offers a different range of benefits.
For example, the U.S. Department of Agriculture offers no-down-payment loans to those buying property in designated rural areas whose income is no more than 115% of the area's median household income. Meanwhile, the Department of Veterans Affairs offers loans to U.S. military veterans and service members with no minimum down payment or credit score.
Niche programs provide significant discounts for buyers in certain professions as well. For instance, the Good Neighbor Next Door initiative, run by the Department of Housing and Urban Development, helps teachers, firefighters, law enforcement officers and EMTs. Local and state-specific programs, like the California Housing Finance Agency's MyHome Assistance Program, help buyers who meet location and income requirements.
Some would-be home buyers may not know these programs exist. If they do, they may not have enough information to choose one over another. Plus, the application processes can be daunting.
This is where human expertise makes all the difference. Real estate professionals can serve as knowledgeable guides, navigating the complex web of programs and initiatives to find the right match for individual buyers. They know how to cut through jargon and bureaucracy because they do it every day.
In today's turbulent and at times confusing market, real estate professionals can offer their clients stability. They're a known quantity as buyers choose among sellers and lenders.
Real estate professionals can explain the true cost of homeownership, factoring in insurance, taxes and fluctuating interest rates.
The headlines about interest rates and housing supply may seem discouraging. But the news isn't all grim. The inventory of homes for sale in the United States grew 18.5% between May 2023 and May of this year. In certain parts of the country, notably Florida and Texas, home prices have started to fall due to high supply. And the Federal Reserve is expected to continue lowering interest rates into 2025.
Moreover, real estate professionals are adept at navigating practice changes, such as those resulting from the recent National Association of Realtors® settlement.
The settlement, which resolves litigation concerning broker commissions, aims to preserve consumer options in real estate services and compensation. As of Aug. 17, listing brokers and sellers can still offer compensation for buyer broker services, but these offers can no longer be conveyed through a Multiple Listing Service, the regional hub for real estate professionals. As always, the compensation for agents assisting home buyers and sellers remains fully negotiable and can be set at any amount, including zero.
Additionally, MLS participants working with buyers will need to establish written agreements with their clients before conducting home tours — a practice NAR has long endorsed. These agreements explicitly define the services offered and their costs, ensuring transparency for consumers.
Through it all, buyers should be aware that help is available. Sometimes they may just need a professional to show them where to look.
Read on the Mississippi Clarion Ledger
Faron W. King is the National Association of REALTORS® 2024 Regional Vice President for Region 5 (Alabama, Florida, Georgia, Mississippi, Puerto Rico, Virgin Islands) and broker-owner of Coldwell Banker High Country Realty, with five regional offices in Georgia and North Carolina. He has been a licensed real estate professional for 24 years.
