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3.8 Million Homes Needed to Close the Affordable Housing Gap

A recent Freddie Mac study on the U.S. housing supply found that approximately 3.8 million additional homes are needed in order to close the affordable housing gap. The ongoing housing shortage is large and rising, due in part to the effects of the pandemic, as well as the high demand for homes coming from eager buyers rapidly entering into the purchasing market. Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage. In 2018, it was estimated that there was a housing supply shortage of approximately 2.5 million units, meaning that the U.S. economy was about 2.5 million units below what was needed to match long-term demand. Using the same methodology, it was estimated that the housing shortage increased to 3.8 million units by the beginning of 2021. The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes as builders struggle to meet exploding demand. In 2020, it was estimated that there were only 65,000 new entry-level homes completed—less than one-fifth of the entry-level homes constructed per year in the late 1970s and early 1980s. "The U.S. is currently experiencing an increase in housing demand that is well beyond what record low mortgage rates would typically yield as many people are spending more time at home. This high demand has driven the housing supply shortage even higher and has caused home prices to rise over 12% from a year ago." Freddie Mac experts do not expect housing demand to decrease any time soon.

*Source: Freddie Mac- Perspectives & Research*


Is Inflation Going to Get Out of Hand in 2021?

A question on many minds these days: Is inflation about to get out of hand from all of the money the Federal Reserve is creating and all the money that Congress is spending? The ingredients for inflation are active in the economy. There is a lot of fiscal and monetary stimulus as congress and the Federal Reserve work to jumpstart the economy after the hit it took from the pandemic. The Recent stimulus bill amounted to about $5 trillion. There is a lot of pent-up demand from consumers, who have had to defer much of their normal spending during the year, on everything from meals out, to travel, to haircuts, to professional clothes for the office. Already, signs of inflation rising are appearing with rising commodity prices and bond yields. Rising home prices don’t factor into government inflation numbers, but they do affect many people's cost of living. However, the Federal Reserve isn't worried. Chairman Jerome Powell is betting that inflation won't get out of hand and that reviving the economy is more important right now. In fact, he actually wants some inflation…not too much, but something a bit above the traditional ceiling of about 2%. If prices do start to jump, Powell figures the Fed can increase interest rates to restrain inflation sometime down the road. Still, higher inflation is expected in the months ahead. Inflation is roughly rising 0.2% a month, which is a reasonable base assumption. If that is the case, we should see 1.5% inflation in March, but it will quickly rise to 2.1% and then 2.4% in April and May, at that relatively being 0.2% assumption. As you can see the increase isn’t outrageous, but it is high enough that consumers will notice. Inflation should begin to relax as we continue to see the economy opening up. There was a surge of jobs added in March as more businesses get back to normal operations. Schools, food service, hotels and amusement parks made up half of the increase this year already. Construction jobs also increased as the weather continues to warm up across the country. With people returning to work the unemployment rate for the country is down to 6% and should continue to fall quickly, hopefully dropping below 5% by the end of the year. One silver lining of the increase in inflation this year is a bigger cost-of-living adjustment for Social Security recipients in 2022. This year's COLA came in at only 1.3%, largely because so many prices dropped or stayed steady in 2020, when pandemic shutdowns effected the economy. Now, prices of gasoline and many other goods and services are rebounding. Figure a jump of social security benefits of about 3% next January.

*Source: Kiplinger Letter: Vol.98, No.10**


Effects of the New Stimulus Package

Home loan interest rates have been moving higher recently, but they're still at very attractive levels that are close to those historic lows we saw throughout 2020. However, with President Biden’s administration recently passed another stimulus plan in an effort to continue to revive our battered economy many are worried about the effect it will have on the housing market. The massive new stimulus plan is causing fears of inflationary pressure – and remember inflation is the arch enemy of interest rates. Initially what the money from stimulus does is create economic activity and some inflation, but after the effect of that wears off, debt takes over and you have to make the payments on that debt. Which leaves less money to generate economic activity and slows the growth. Think of it like a family that just went to into debt to purchase a new car. The initial purchase creates economic activity, as the manufacture, seller, and dealership all make a little money from the transaction. This economic activity generates some inflation pressure, but it wears off and what remains for many years is the monthly payment on that debt which acts to slow the growth. This is exactly what is expect to happen with the governments issuing stimulus money. With the stimulus plan going into effect, we believe interest rates will continue to bump a bit higher at the beginning of the spring market. As people continue to gather more and return to work it will alleviate inflation pressure and we will start to see rates relax more later in the year. If you have been considering a home purchase you have two options, choose from the rate today or the rate in the future. I highly recommend getting locked into a lower rate now while you have the opportunity to. Plus, if you buy into a rate that you don’t love we can always refinance your loan in the future. Let’s get your loan moving before rates move higher! Contact me today to see how you can benefit before things change.

Biden’s Proposed Tax Credit Could Drive up Home Prices

President Elect Joe Biden has proposed a $15,000 tax credit to help first-time homebuyers purchase a property. The proposed First Down Payment Tax Credit is meant to help families offset the costs of homebuying. Buyers will receive the tax credit when they make the purchase instead of waiting to receive the assistance when they file taxes the following year. The National Association of Realtors Chief Economist Lawrence Yun responded to the proposed tax plan by saying that the $15,000 tax credit is good news since it can go a long way in terms of helping first-time homebuyers and minority households. However, this is only one part of the solution. Although this plan seems like a good path to take to increase homeownership in America, there are also dangers to the tax credit. “The full story is that stimulating the demand just by itself is insufficient,” Yun said. “The $15,000 will certainly help the possibility for the potential first-time buyers, but the only way to make that impactful is to ensure that we have sufficient supply available as we go into 2021.” Yun fears that Biden’s proposed tax credit will add more fuel to the housing demand without addressing the lack of supply. Which could result in home prices accelerating much higher; partly negating some of the benefits of the $15,000 tax credit. Currently we are experiencing a historic home shortage and record-low mortgage rates are pushing prices to new heights. The housing supply shortage continues to get tighter as not enough homes are being built to face the demand from buyers. “If we add further stimulus to the demand without addressing the supply… it will simply bump up the prices even higher.” As we move forward into the new year it is important to be cautious that this tax credit could drive home prices higher. If you are wanting to get ahead of this tax plan now is the time to act. Contact us today to discuss your options for a home purchase.

Are Home Prices Too High?   A lack of new construction in the last 10 years may actually be a blessing in disguise. For now, that is.   ’ve been getting a lot of questions lately about home prices. Are they too high? Is the market overheating? I think people are overreacting just a little bit. Here’s why. As you can see on the chart in the video above, the number of new construction homes being built has moved up and down in cycles for the last 60 years. The gray lines on the graph show our recessions. If you look closely, you’ll see that we’ve built less than 1.2 million new homes in the last 10 years. We’ve never had another 10-year period where we built less than 1.2 million. We’ve occasionally dipped below that, but those dips have never lasted longer than 18 months. “If you don’t already own a house, you need to.” Another topic I get asked about a lot is inventory. The reason it’s so low right now is because we haven’t built enough homes in the last 10 years. Homes are going to continue to go up in value as long as this is true. If you don’t own a house already, you need to. If you have any questions at all about buying or aren’t sure what you can afford, give me a call or send me an email. I would be glad to help you out. ~Anthony


The Final tax plan that will affect Utah Home Buyers and Owners has just been approved. One of the biggest new changes will be the proposed doubling of the standard deduction. This will leave very few people to itemize deductions and write off their mortgage interest. The plan increases the standard deduction for individual taxpayers who don’t itemize from $6,350 to $12,000, and from $12,700 to $24,000 for couples. My opinion is raising the standard deduction is great for families and most people will save money on their taxes as the majority of tax returns that I review have itemized deductions far below $24,000. I think this is a great thing that will save a lot of people a lot of money. The National Association of Realtors (NAR) believes that this removes an incentive for people to purchase houses and that home values will decline 10%. I do agree with NAR to a degree, but I don’t believe this section will truly hurt home owners or lower home prices. In all my years of helping people buy houses not one has bought a home for the tax write-off. It’s a bonus, but my experience is that people buy homes to house their families, stop throwing money away on rent, and to better prepare for retirement. The Current tax code allows home owners to deduct mortgage interest on loans up to $1,000,000. The New tax Plan lowers that to $750,000 on mortgages. Some great news is that the final tax plan eliminated the verbiage changing the capital gains exclusion for primary residences. Currently if you live in your home for 2 out of the last 5 years you will not pay any capital gains taxes. The initial plans were a big concern for me because both the senate and house proposed tax plans increased the live-in time period to five out of the last eight years. This means that owners would need to live in their homes for 5 years in order to claim the exemption. If they were to sell their house prior to living in it 5 years they would be required to pay capital gains taxes. I am glad this changed. I think had this been approved changing the live-in time period for the capital gains exemption is a tragedy. This would have caused fewer people to sell and purchase a new house, further tightening home inventory. If an individual gets a raise and wants to upgrade their home, they may think twice if they’ve experienced home appreciation. They would not be able to use all of their equity for the down payment on the next house because they would have to pay hefty capital gains taxes. This may cause fewer entry level houses to come up for sale and less buyers looking for move up properties. Lastly, are current home prices in a bubble and could they fall dramatically with this new tax plan?  I don’t think so. I see home prices continue to appreciate modestly for the foreseeable future. I do not see home prices decreasing until there is a significant change in employment. Part of the new tax plan is lowering the corporate tax rate from 35% to 20%. This is going to cause big corporations to have significantly more money in their pockets allowing them to hire more employees and increase wages. I feel that the lowering of the corporate tax rate will keep the unemployment rate at record low levels for an extended time. Until the labor market gets significantly worse people will continue buying and upgrading homes, especially as their wages increase. The lowering of corporate taxes means more home appreciation for longer. If you don’t own, the longer you wait the more you will pay for a house when you do buy.  

Is The Market Over Heated?

  Lately, I have been asked over and over again are home prices too high? Is the market over heated? Are we headed for another down turn? My answer is I don’t think so, here is why: the first statistic I always look at is the Housing Starts Number. This shows the number of new houses beginning construction. Interestingly, we have had a 10 year period of housing starts below 1.2 million. We have never had another 10 year period in the last 60 years below this point. You can see we have dipped below this level occasionally, specifically after a recession but we have never stayed below 1.2 million for longer than 12—18 months. Over the last 60 years a more normal housing starts number is around 1.6 million. I am often asked about why we have such low inventory. This is why. We haven't built enough houses for the last 10 years in a row. Low inventory is here to stay for the foreseeable future. This means home prices will continue going up. The second statistic I always look at is the jobs number. When people have jobs they buy houses. Utah’s Unemployment rate is one of the best in the nation and it looks like it is going to keep getting stronger. In the last year Utah has seen job growth in almost every category . In 2016 Utah added 49,500 new jobs. I expect to see home appreciation in the 4-6% range for the next few years. Now is a great time to be a homeowner. If you have any questions on where the market is headed, homeownership, or mortgages please give me a call.  

Top Agent Magazine Cover

Anthony VanDyke With 187 online client reviews high-lighting his expertise, communication skills and dedication, Anthony VanDyke has developed quite a successful career as a mortgage loan specialist in the state of Utah. He serves many clients in Salt Lake County, but also has clients all over Utah as well as in California. “Originally, I wanted to be a real estate investor and have money coming in from rental properties, so I got into the business to learn more about real estate investing. One thing led to another, and I fell in love with lending. It has turned out well,” shares Anthony. He became a licensed mortgage officer nearly 10 years ago, and he currently has his own brokerage firm. “Our team specializes in refinance mortgages and first-time home buyers. We help everybody,” says Anthony. His firm’s significant number of positive testimonies from clients is indicative of his mission statement. “Our mission is to deliver a positive mortgage experience consistently. We put a lot of systems, processes and checklists in place and have different team members who work together to communicate when clients have questions or any needs. Communication really helps out. I always return phone calls the same day, and our firm has a Tuesday update call program to communicate with all of the parties involved in the transaction. If there are any changes, our system sends automatic emails to everyone,” explains Anthony. In addition to his top-notch customer service, Anthony excels at creative problem-solving. When thinking of finance, creativity does not always come to mind, but Anthony brings his ingenuity to the table. He says, “I’m often referred to as the ‘resurrector.’ If a loan is dead, our team keeps working until we find a way to solve it. When a potential client has bad credit, and we can’t approve them, we create a detailed plan, provide free credit repair and follow-up with them monthly until they qualify.” Anthony’s firm has not only gained a reputation of excellence from clients, but he and his business have also been featured multiple times in Yahoo News and the Salt Lake Tribune for success in the mortgage industry. When asking Anthony what he likes most about working as a mortgage specialist, he says, “I enjoy helping people buy a home who never thought they could afford to make it happen.” On his off hours, Anthony gives back to the community and is an avid reader. He and his firm donate time on a quarterly basis to the Utah Food Bank that provides meals to those in need. In addition to feeding children during after-school programs and delivering meals to senior citizens, the organization has a Backpack Program that gives children backpacks filled with food so they have plenty to eat during the weekend. Anthony explains, “We invite real estate agents and our clients to help volunteer with whatever the Utah Food Bank needs. We have bagged food and helped sort out canned goods. The last time we volunteered, there was a 100-pound bag of beans that we had to measure into 1-pound increments so the food could be distributed.” When not giving to charity, you can find Anthony reading business books or novels by Ernest Hemingway. “I can’t get enough of Ernest Hemingway,” shares Anthony. One of my favorite books he has written is ‘A Farewell to Arms.’”       Top Agent Magazine_Page_1                           Top Agent Magazine

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ALV Mortgage Announces Exciting 1% Down Payment Equity Boost Program for Utah

If you've been putting off the search for your dream home trying to build up the required down payment, you will definitely be interested in a new program offered by ALV Mortgage.

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Our new innovative Equity Boost Program requires a buyer put down 1 percent of a home’s purchase price as a down payment.  We as the lender contribute an additional 2 percent down payment, and the 3 percent total equity at closing allows qualified buyers to obtain a conventional mortgage at a great rate.

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Innovative and Exciting

Although we have already helped thousands of Utah homebuyers find the financing that they required for their dream homes, this new program makes buying an easy decision for many others. When qualified Utah buyers find they can get into a new home with a down payment often less than one month’s rent. We are proud to introduce our Equity Boost Program as one of the most creative mortgages in the industry.

Secure Your Future

Home ownership has long been viewed as one of the primary ways to achieve a secure future by building an equity stake in real property. The ability to gain a 3% equity share with only one third of that amount invested in cash is almost unheard of.

For details of this new program, or to discuss other available options, Call Anthony VanDyke. As one of the top 2% of mortgage loan originators in the country, Anthony will find the right mortgage product to suit your needs. Whether you're buying a first home or a retirement villa. Why not contact us now and let us go to work for you? We'll help you save money and set you on the path to home ownership and equity building.