Carrots and sticks…

Changes already approved and coming include: the reduction of the allowed Seller Assistance to Purchasers for closing costs from 6% to 3% of the home’s purchase price (scheduled to take place at a yet to be announce date this summer), which will eliminate many buyers from the market since a large portion of Buyer’s simply do not have the cash to cover both the minimum down payment and the closing costs and pre-paid items. This will not only impact purchasers; but, by reducing the number of purchasers is likely to drive home prices down even further.

Add to that the fact that the USDA Rural Housing Program which has been a place for the cash strapped purchasers to find housing solutions (USDA Loans allow up to 102% of the home’s purchase price to be financed) is now projected to be out of funds before the end of May. We are of course hoping that congress will expand funding to this program… but that is in no way a sure thing.

All-in-all the short term outlook is as follows: Buyers and Sellers need to be aware of the changing environment and act to take advantage of the currently favorable market conditions which still exists even in the absence of the current Tax Credit program. It looks as though we are returning to the day when purchasers must plan and save for a home purchase. For the next six-to-nine months informed buyers will be making decisions based on a fear of losing these favorable conditions rather than on getting a check in the mail. Sellers will need to be aware of these changing market conditions and take advantage of the situations and circumstance that promote a favorable market for buyers to take action or be prepared to stay put. You know when you think about it… that probably is more of a normal market.

Page 2 of 2 | Previous page