Why So Many Buyers?
What is going on with the current Real Estate Market? As you may know, listings are scarce. They are drying up yet Buyers are out hunting for homes in droves. Why is this? There are some changes in the wind concerning home mortgages, which are prompting Buyers to purchase now. Some things are moving towards The Sellers favor while others concern mortgage rates and new increases for FHA lenders.
With a lack of inventory, home prices are steadily inching upward. Home inventory dropped 20.4% from last year, coupled with a modest increase of .6% in new listings is driving up prices and creating a highly competitive market for Buyers. In north Texas, home values have gained 8.6% from last year. Most of the growth has come from the lower end homes $99.000 and below. For instance, in Tarrant County the lower tier homes increase 3.9% while the high-end homes $224,900 and above had a minor drop of .3%, however on average home prices have risen and forecasted to continue rising.
Mortgage rates are another factor. The rates are currently very good. 30 year fixed rates are at 3.625% FHA/VA loans between 3.25% – 3.5%, 15 year fixed rates at 2.875% – 3% and five-year arms at 2.625% – 3%. These rates are up a bit from last year however, they are still very good making purchasing attractive to Buyers. Nevertheless, these rates will not last and shoppers understand this. We are currently in a “rising rate environment”. I would not be surprised for rates increasing somewhere in the 4% range by the end of the year. Many people are taking advantage of the rates before the upturn.
There is an added incentive to buy now if you plan on financing with a FHA loan. A FHA loan is a Federal Housing Administration mortgage insured loan. The loan originates by the bank but guaranteed by the federal government. With a FHA loan, you can purchase a home up to $271,000. They are attractive to buyers because of the low down payment requirements, 3.5%. On April 9, the MPI rate will increase from 1.15% to 1.25%. Since FHA loans allow down payments of less than 20% mortgage insurance is required. The MIP is Mortgage Insurance Premiums for the insurance. This premium paid monthly on top of your mortgage payment. To avoid this, Buyers must purchase a home prior to April 1, 2013. The MPI increase is not the big change however. MPI typically charged on the first 78% of the loan balance. On June 3, this will change to apply to the TOTAL BALANCE. That is a substantial increase. Many FHA Buyers are out shopping now to avoid these rate increases.
Homes are still out there http://www.djlyons-realtor.com/ but the good ones are going fast. This is really starting to turn into a Seller’s market. No wonder the listings are short with all of these Buyers. Those sitting on the fence about selling their home really should consider listing their homes now while the going is good. See ya down the road.