After interest rates doubled, housing demand increased and inflation grew, even home loans are now becoming too expensive for first-time buyers in Summit County, according to local officials.
When someone wants to buy a house and they may not be able to afford it, they can go to a lender, apply for a loan and take out a mortgage.
This allows people to pay for the house as they live there while having space for a family. However, Summit County lenders are finding that some first-time home buyers can’t even afford the mortgage they would pay to help them buy their new home.
Kevin Berkley, a Summit County lender, gave an example: Let’s say there’s a couple hoping to get a $400,000 loan for a house. If the interest is 6%, your payment is $2,400.
“But wait,” Berkeley said, “dues are $400 a month. Those are added. Taxes, insurance, and private mortgage insurance would easily cost $250 more. Now you’re at 3,000 $,” he said.
Then Berkeley added a probable car payment of $500. Thus, the monthly debt repayments amount to $3,500. That doesn’t sound too bad, but Berkley said what confuses almost everyone is the income requirements for this type of loan.
To apply for and receive a loan, there are three main requirements: a credit rating, a down payment and income.
“He’s the one who’s always the dealbreaker,” Berkley said, because to get a loan, the buyer has to pay off double their debt. This means that to pay the hypothetical mortgage of $3,500, the buyer would need to earn at least $7,000 per month.
“$84,000 a year to even qualify for a $400,000 loan,” Berkley said. He added that even a quick search online would barely turn up a single $400,000 home in Summit County.
According to the Land Title Guarantee Company’s Summit County Market Analysis, the average resale price for a single-family home for all of 2021 was $1.7 million, and the average resale price for the same type of house from January to May 2022 was $2.15 million.
That’s why, Berkeley said, restricted-deed housing is integral to first-time home buyers. “Unless it’s a $300,000-600,000 property deed, it’s very difficult for a local to make enough money to qualify,” he said.
Laurie Best, Housing and Child Care Program Manager for the Town of Breckenridge, said she has worked on affordable housing in Breckenridge for more than 20 years. And right now, she said, it’s been extremely difficult because of low inventory and high demand.
“It drives up this incredible real estate market right now where prices are unaffordable for the majority of our local workforce,” she said.
Leah Canfield, a Summit County real estate broker, said while the best solution is to add more homes, Summit County isn’t like Denver — where suburbs can expand into the plains. But unless more houses are built, she thinks the legislation can’t do much.
“I really believe that people in my area, as much as members of city council, as much as first-time home buyers, I think we all have very similar goals in that we want to see the community prosper and we want to see the locals stay here, says Canfield. However, she added, “there is disagreement on the best way to do this”.
Canfield thinks the best way to change that is to build as much inventory as possible in the “affordable housing space.” But with space limited, at some point Canfield said there should be a way to create affordable housing areas for working people in Summit County that will “never” go to homeowners. second homes.
Best said Breckenridge is working to provide affordable housing for Summit County’s workforce. In February, she said, Breckenridge committed “$50 million in public investment to create more than 950 units over the next 5 years.”
While Canfield said she never really sees an end to this expensive real estate trend, she hopes the market will soon transition from a seller’s market to a buyer’s market.
According to Canfield, 15 years ago, during the Great Recession, was the last major real estate shift, and normal real estate cycles happen every seven to nine years. She added that she sees some small wins for buyers, but very rarely.
Even then, as Breckenridge’s housing director, Best says she sees situations every day where residents have to decide whether to stay in Summit County or leave because they can’t afford it.
“Unfortunately, so many of our locals are making the decision to go elsewhere. Just because of housing challenges,” she said.