According to Charles Blumenkehl, managing partner for Blue Asset Management LLC, purchasing real estate today as it relates to income is at its most affordable levels since before 1989.
Blumenkehl points to studies released by Moodys Analytics that show the ratio ofhome prices to household income falling to 1.6, less than the historical average between 1989 and 2005 which was 1.9. The ratio was at its highest level in 2005, according to the study, at a ratio of 2.3.
According to Blumenkehl, “Buying a home, based on average consumer incomes, is cheaper now than in the last 22 years. The affordability is fueled by the rate of foreclosures in many markets, and the markets which have the most foreclosures have the cheapest affordability ratios.” Blumenkehl continued, “right now, buying a home is cheaper than renting a home. The key, unfortunately for many people desirous of buying a home, is whether they can qualify for a mortgage based on the more stringent income, downpayment and credit underwriting requirements imposed by most lenders today”
Blumenkehl added, “The good news is that there are still low money down options available to buyers who are gainfully employed and have verifiable income. FHA mortgages are still available with downpayments of less than 5%, VA mortgages for qualified veterans are still available with no money down, and for the most creditworthy of potential home purchasers FNMA and Freddie Mac mortgages with 10% downpayments are available. With mortgage rates and housing prices at historic lows, anyone who can buy a house today should, and will be very pleased with their decision to buy in a few years when the glut of foreclosures subsides and the real estate market normalizes to it historic trends.”
Charles Blumenkehl, a 30+ year veteran of New Jersey Real Estate, founded Blue Asset Management LLC in 2008 to leverage what he saw as opportunities which became available in New Jersey Real Estate as a result of the mortgage meltdown leading to the foreclosure crisis. Blumenkehl’s fund buys performing and non performing residential and commercial mortgages, distressed and investment real estate. For more information about Charles Blumenkehl or Blue Asset Management LLC, log onto the company website at www.blueassetmanagementllc.com or call the company directly at 973 835-1400.