Dreaming of buying your first home in 2020?

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Here’s how you can make that dream a reality

This is the first of five articles covering the current Twin Cities residential real estate market, how to navigate the homebuying process, and how Twin Cities Habitat’s expanded mortgage program is making it possible for more metro-area families to buy their first home.

It’s no secret that there’s an affordable housing crisis in the Twin Cities. For years there’s been a shortage of homes for sale that first-time homebuyers can qualify to purchase. According to housing industry intelligence site Metrostudy.com, in 2019 Saint Paul and Minneapolis ranked among the 15 most competitive housing markets in the U.S. That’s great if you’re a seller, but tough for those looking to buy.

The deck is stacked even higher against people of color. In Minnesota, roughly three in four White families own a home, while roughly one in four African American families do. This homeownership gap is the largest of any state in the nation. In fact, the homeownership rate for Black families is lower now than it was when the Fair Housing Act was passed in 1968. Given the reality of the current Twin Cities housing market, it’s going to take new homebuying options and resources to narrow that gap.

Challenges continue for first-time buyers Experts predicted the housing shortage would be over after 2019, but homeowners are opting not to sell due to the strong job market and low mortgage rates in the Twin Cities. “We thought the price of homes would stabilize by now, but it has not happened yet,” said Adade Amenounve, homeowner development coordinator with Twin Cities Habitat for Humanity. “The overall median home price according to Zillow has increased 8.2% over the past year.”
Will 2020 continue to be a seller’s market in Minnesota? Most likely, the answer is yes. The
fact is there are a number of factors that impact the real estate market, including inventory (the number of houses listed for sale), the number of buyers who are interested, and mortgage interest rates.

While low inventory and competition among potential buyers will continue to favor sellers,
historically low mortgage interest rates benefit potential buyers. Low mortgage interest rates typically mean a buyer can afford to buy “more house” because the interest portion of their monthly payments is lower.

“With mortgage rates low, the timing is indeed ideal for those who want to enter into homeownership and for those looking to move on to their next home,” said Lawrence Yun, chief economist for the National Association of Realtors in a recent NAR.com article.

“I agree with every prediction that 2020 is the best time to buy,” said Habitat’s Amenounve.

“However, there continues to be a limited inventory of houses on the market in Minnesota.”

Set yourself up for success
So how do you persist in your quest to buy a home given the reality of low housing inventory and stiff competition among buyers? You can do it—find and close on a home you love—if you do your homework and remain patient. Although the current seller’s market means it may take a little extra time to find the right home, your patience will pay off.

Stack the odds in your favor by getting prequalified for a mortgage, giving yourself plenty of time to search for the right home, and exploring neighborhoods with lower average home values. Increase your odds of success even more by exploring whether a Habitat mortgage might be right for you.

Use a Habitat mortgage* to buy a home on the open market
More than 1,300 homeowners have partnered with Habitat since 1985 to access an affordable mortgage and buy a home we’ve built or renovated. Now households can choose to work with a real estate agent of their choice to find a home for sale on the open market. The new open mar-
ket program gives families more choice in how they become homeowners with Habitat.

And we’ve expanded our income eligibility range, so we can partner with more families.

Now, a household of four earning up to $80,000 per year could qualify for our mortgage.
We’ve learned these buyers lack options. They often earn too much for other affordable homeownership opportunities, but not enough to qualify for a traditional mortgage.

Last year, 114 Twin Cities families partnered with Twin Cities Habitat to buy a home. This year, it could be your family. Want more information about navigating the homebuying process? Check out our first-time homebuyer guide at www.tchabitat.org/guide. To learn more about Habitat’s mortgage program and find out if you’re eligible, visit www.buywithhabitat.org.

*Habitat mortgages are provided through our wholly-owned nonprofit subsidiary, TCHFH Lending, Inc.