The Path to Ownership: What a First Home Takes in Roseburg Today

It is no secret the last several years have proven cost prohibitive for many buyers; especially for buyers considering purchasing their first home. While exhilarating for those already in the position of homeownership, record high property values climbing even higher can have a disheartening effect on those struggling to earn a sufficient income to afford rising rent and having enough left over to bolster their savings.

This is a real and difficult situation for many - it is as though the cycle cannot be broken and they will be stuck forever in a treading-water position. Little-to-no progress forward and only one crisis away from a major setback financially.

Decrease Expenses, Then Increase Income

The best way to escape this interminable cycle is to first 1) decrease expenses and secondly 2) increase income - in that order. Increasing your income will not help if you have an expense problem. All of us can immediately trim and decrease our expenses. Many cannot immediately increase income; that can come in time. You will find you have "increased" your income by merely reducing your expenditures. Lifestyle inflation or "lifestyle creep" is real and should be diligently resisted.

Once you establish a low-cost lifestyle and a sustainable source of income, you can begin building your savings in preparation for buying a home. You do not need a 20% down payment to purchase a home - common down payment amounts include 0%, 3.5%, 5%, or 15%, depending on your loan (USDA, FHA, VA, CONV, etc). Having said this, the more money you can put down the lower your monthly payment will be. Having a 20% down payment is an outstanding and worthy goal!

With the recent market changes, your experience of buying a home will be more normal and less frenzied. Property values have absolutely stabilized (no longer increasing) and in many markets are decreasing. Unless you plan to sell within 24-36 months, you should not be overly concerned about dropping property values. You only realize a loss or gain when you sell. Adjust your expectations and purchase a home that you can truly afford.

Pros and Cons of Buying a Home in the Current Market

Here is a quick breakdown of the new buying environment for buyers:

Pros

Seller Paid Closing Costs. Seller Paid Rate Buy Down. Seller Paid 2/1 Rate Buy Down. Seller Paid Repairs. Seller Paid Improvements. Price Negotiation. Pay Less Than Asking Price. No Need to Waive Inspection. Inspection Negotiation. Time to Think. Contingency Contracts. Longer Contract to Close.

Cons

Higher Rates.

The 20% Down Payment Myth

There is a common misconception that, as a homebuyer, you need to come up with 20% of the total sale price for your down payment. A survey by LendingTree asked what is keeping consumers from purchasing a home, and for over half of those surveyed the ability to afford a down payment was the biggest hurdle. That may be because those individuals assume a 20% down payment is necessary.

While putting more money down if you are able can benefit buyers, putting 20% down is not mandatory. As Freddie Mac puts it: “The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”

If saving that much money sounds overwhelming, you might be ready to give up on the dream of homeownership before you even begin, but you do not have to. There are programs for qualified buyers that allow them to purchase a home with a down payment as low as 3.5%, and there are options like VA loans and USDA loans with no down payment requirement for qualified applicants. The only groups who put 20% or more down on average are older homebuyers, who can typically use the sale of an existing home to fuel a larger down payment on the next one.

Roseburg and Douglas County Real Estate (November 2022) Market Update

Comparing 2022 to 2021 through October in Douglas County, the average sale price has increased 12.0% from $317,100 to $355,000. In the same comparison, the median sale price has increased 12.7% from $284,000 to $320,000. Inventory increased to 3.2 months in October. Total market time decreased to 48 days.