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Home Buying Increasingly Challenging

June 5, 2018

April home sales have slipped, reaching their third lowest level over the past year, according to a report released by the NAR (National Association of Realtors®). Home sales, like most other things, are driven by supply and demand. Underlying data show that the national demand for purchasing a home is very robust but supply is not responding accordingly. What’s causing this low-volume dynamic? The answer is homes aren’t staying on the market very long. The majority of listings seem to be going under contract in less than a month, and multiple offers for the same property are becoming increasingly common. So, with high demand and limited supply, a few market changes are already taking place and they may become quite challenging for prospective home buyers in the middle or low-tier. This is particularly profound in most densely populated urban areas.

 

Considered these trends, home prices will likely continue to be pushed higher, making homes less and less affordable for the average-income consumer. Rising interest rates and increasing home prices mean we also need to save more money for the down payment . It is not difficult to understand that home buying may become a quite distant reality for many. But thanks to new equity shared financing, determined individuals and families who understand the importance of home ownership from a financial and emotional perspective have options that can help them get into their ideal home.

 

Equity sharing, where EquiFi co-invests with you, is a quite attractive alternative when you realize that you may not be able to become the owner of the home that is right for you, unless you receive a co-investment. Our equity along with your down payment can dramatically reduce the loan you need to finance your home. That means lower monthly payments, because our co-investment is equity and we don’t make any money until you sell your home. With our Equity Funding Instrument (EFI) you may even be able to eliminate costly mortgage insurance. We can all agree there is a big difference between continuing to rent without having any return on your cash out-flow, and finally acquiring an asset that eventually will become the pillar of your wealth creation; there is also a big difference when you buy a home that truly suits your needs and places you and your family on the life trajectory that you wish to be on.

 

Some may argue that an equity sharing product could be used to obtain a bigger home or a home that is out of the consumer’s reach. Yes, we thought about that too and asked ourselves how we could prevent home buyers from getting a property that is not right for them and that would eventually harm them, as a result. We got the answer in restricting the amount of co-investment that can be funded, based on level of indebtedness, as well as several other parameters that deeply evaluate the financial situation of each applicant and the area where they look to live in. Our equity sharing product is not designed to obtain the bigger or flashier home. It is designed to allow families to live in a more suitable and ideal home, based on the specifics of their situation. Thank you for reading and see you in a week!

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Author of the Post

Laura is a member of the EquiFi leadership team.

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