Real Estate Douglas County Fact or Fiction

June 18, 2020


Did you know, that right here in Douglas County, there are almost 15,000 residents who are currently renting but can afford to purchase a home. They are qualified to buy a home, so why wouldn’t they? Let’s talk about some of the reasons.

Housing market unstable?                        

Some people think that the housing market isn’t stable, but home prices in Douglas County are forecast by Smart Data to appreciate by 13% over the next 5 years. You know what that means in dollars and cents? If you purchased a home at the median price of $151,000 you could gain $20,000. Now that’s not the 5-10% annually like 15 years ago, but we saw what happened with that bubble. 2-3% annual growth is stable, and much more sustainable long term.

Not enough money for down payment

This is a very strong market; however, here is the biggest misconception: in a national survey, the number one reason why people are still renting even though they are qualified to purchase a home is because they think they need 20% down. It’s kind of hard to believe that people in 2020 still think they need 20% down. That couldn’t be further from the truth! You can purchase a home with as little as 5%, or even 3% down, based upon the programs that are available and qualifying criteria. There are programs with no down payment and in some cases down payment assistance. Of course credit score is part of the qualifying criteria to determine what’s available, but it’s extremely rare that a 20% down payment is needed. Some loan programs allow gifts as well, so that can bridge the gap between savings and down payment

I can’t afford a house payment

Did you know that in Douglas County for a 200K house with a 3.5% down payment that the mortgage is less than the average rent for that same valued home based on Smart Data? That’s a 7K down payment. Doesn’t sound as daunting as 20%. On top of the mortgage payments in today’s market being less than rent, and those cash flow advantages, when factoring estimates for appreciation and the loan pay down, you could be over 125 k to the positive nine years after buying that home. That includes cash flow differences monthly for 9 years, appreciation over 9 years, and loan payments for 9 years. According to NAR the average time in home is 9-10 years, hence the nine year number.  These are based on averages and every situation is different but the power of ownership should be clear.

Let’s touch on debt ratio. Debt ratio is a calculation that determines what you can afford monthly, often expressed as a percentage. The front ratio is the house payment divided by gross income. The back ratio is all your debts divided into gross income. 28/36 is the base standard for many programs. There are higher ratios allowed in many cases, but this is a great gauge of affordability.

If you’re still renting but want to start investing in your future, reach out. I can help you get prequalified and find a quality realtor for your area. Happy Hunting!

*Data from MBS Highway

Shea Shoemaker
Author: Shea Shoemaker