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High rates, high housing prices, low inventories, and affordability at all-time lows in the housing market are not helping first-time home buyers. Markets are not all created equal when it comes to supply, affordability, demand, and entry-level prices.

Let’s take San Diego, since I live here and where affordability is a real issue for buyers and renters. San Diego is not the only place in the country that is having this problem, it is in many major cities and states in the US

A $750K purchase price, 10% down, loan amount $675,000. Let’s assume the rate is 7% on a conventional 30-year fixed loan. The total payment (PITIMI) = $5,618. That would mean that a buyer/buyers would have to make anywhere from $11,500 to $12,500 monthly depending on approval. This also means that they would have ZERO additional debt, HOA payment, or any negative income from anywhere else

If you took the same scenario when rates were much lower, let’s use 3.25% for the same scenario that total payment would be $3,951. I realize 3.25% is not a realistic rate and why even bring this up, everyone is comparing and stuck on these past low rates. It is also because why would anyone ever move if they don’t have to when they have that great low rate and payment?

Everyone is wondering how would a first-time home buyer afford to purchase a home then it must be so out of reach for most. Are they just going to be lifetime renters in a place like San Diego The answer is that 40% rely on HELP from family AKA Bank of MOM and DAD. Down payments help go on the loan for more income to help qualify or a combination of both.  You would be surprised how many parents are willing and help their kids purchase a home.  In a place like San Diego, I would say it is much higher than 40% of first-time home buyers receive help on purchasing their first home and most of the time it is with the down payment.  Dual income in San Diego is very common and almost a must to live here and have some type of lifestyle and ability to enjoy life without feeling broke.

There is a right and wrong way to gift funds to your kids or get them from your parents. If you need more info on this please reach out and let’s chat 😊

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