Home-buying tips in the Tahoe region
November 29, 2016
One of the nagging issues facing Tahoe locals is a lack of affordable housing. Rent increases have far outpaced the cost of living index and rents are rising more quickly than home values. This statewide problem is more pronounced in Tahoe due to the conversion of many long-term rentals into more lucrative vacation rentals.
Most renters would rather be homeowners and owning a home can sometimes costs less than renting, but many potential home buyers remain on the sideline due to a lack of a down payment. Down payment assistance programs (DAPs or DPAs) address the No. 1 obstacle to first time home ownership, namely acquiring the necessary cash.
Available in California and Nevada, DAPs offer loans and grants that provide the funds needed to buy a home without adding to the buyer's monthly house payment. Plus, these programs feature reduced rates for mortgage insurance (which lowers the payment) and mortgage tax credits (MCC/MTC) that can deliver income tax savings and count toward the buyers' income to qualify. Further, the seller of the home can contribute toward the buyer's closing costs.
Home buyers don't need to be first-time buyers or have perfect credit (down to a 640 credit score). There are income limits and property price limits, but these limits are fairly high. The number and combinations of DAPs is bewildering so choosing an experienced lender is key. Online lenders generally are not sufficiently familiar with all of these programs so, as always, there is no substitute for choosing an experienced lender with local knowledge and an ethical reputation.
Recently, we were able to help a local family buy a home using a Nevada rural grant, and not only is their payment a few hundred a month less than they'd originally hoped, but the payment is quite a bit less than rent for a comparable property. That's even before the income tax savings. It helped that they bought in Gardnerville where homes are more affordable, but a home in Carson Valley is by no means a downgrade from Tahoe. Valley sunrises and sunsets are routinely stunning, the snow-capped Sierra Nevada rising five-thousand feet above the valley floor is breathtaking, property taxes are about half of California, and if your paycheck comes from a Nevada employer, you might not need to pay state income tax. (This is not tax advice.)
Adjusted for inflation, today's Tahoe median home price is comparable to the median price in early 2003, according to local MLS data. And interest rates today are almost a full 2 percent lower than they were in 2003, according to HSH.com, which means that the same mortgage payment today will buy you 25 percent more than it would have in 2003.
So if you thought that you missed the opportunity to buy when prices were low, think again. And if you think you need a suitcase full of cash for a down payment, talk to a knowledgeable local lender and explore your options.
Happy home hunting!
Mark Treiber works with Dignified Home Loans. He can be reached at 530-208-6704.