In last month’s blog, I talked about the good and affordable amount of housing stock that Bristol has to offer new and seasoned homebuyers alike. Because this isn’t a research article, I won’t get heavy-handed with the data, but reports issued this year regarding the cost of renting vs. owning in the U.S. stated that Connecticut hovers somewhere around the 30% cheaper mark to own a home vs. rent over the course of the same 30-year period. (Considering that you’re building equity, paying your own mortgage, can control and maintain your own energy efficiency features, etc.) So let’s talk about that. We know there are a good amount of affordable houses here. What comes next? What does affordable really mean?
Let’s take a standard, 1980s-ish two-bedroom condo here in Bristol as our example. The average sale price of nearly 100 of these units over the last year is about $115,000 (not counting co-ops or foreclosures.) At $115,000, a mortgage + homeowner’s insurance, mortgage insurance and city taxes ends up in the area of $1,100-$1,200 for your average buyer.
“But what’s an average buyer?”
Well, an average buyer, given those I’ve worked with, would be someone with moderately good credit and a median debt-to-income ratio. For example: someone making $30,000 or so dollars a year, paying off some student loans and a car perhaps, no major collections, credit in the mid to high 600s. This type of person can often qualify for an FHA mortgage with a low 3.5% down payment.
When you take this data, and this same buyer (who almost always says “there’s no way that I could possibly qualify for a mortgage…”) we find they usually have some options. This is especially true since renting the same unit in Bristol averages $1,150 a month, with NOTHING included.
So how does an “average” buyer know it’s time? And what do they have to do to get to the crucial step of getting prequalified?
So, does this “typical” buyer sound a little (or a lot!) like you or someone you know? Let’s talk about your options. Make sure you gather crucial financial data, like a basic budget of your monthly income and bills, your latest tax return, last few months of paystubs, and a couple recent bank & asset statements. Knowledge is the first step toward ownership, and it’s much closer to being a reality than you’d expect!
Sarah Johnson is a writer, marketing consultant and REALTOR® with Berkshire Hathaway HomeServices New England Properties in Farmington. She works with buyers, sellers and renters in Bristol and all over Central Connecticut. She is a 2002 graduate of Bristol Eastern High School and has volunteered on various boards and task forces in Bristol since 2011. Sarah can be reached at email@example.com or 860-462-3196. Follow her on Facebook at @SarahBJohnsonRealtor