Dallas Fort Worth market is the seller’s market since last year or so with low inventory. Part of the North Texas, especially in Collin County, there is a shortage of new build homes too. Many homes in the mid range prices go so fast and many have multiple offers. This means buyer’s power of negotiation is less and in some cases the house is sold higher than the original listing price, due to multiple-offer situation.
Also, the interest rate from one year ago is slightly higher. Additionally, some loans such as FHA have higher FHA MIP rate (10 base points) starting April 1st, 2013 and Duration of MIP will remain in effect, starting June 1st, 2013, until the life of the loan or minimum 11 years vs. today’s case that whenever the balance reaches 78% of the original loan amount and/or 5 years the MIP stops.
Increase Monthly MIP rate, starting April 1st, 2013, for a loan amount of $400K would be $32.18 per month. The effect of MIP duration change for the life of loan (30-year fixed at 4% Interest Rate) would be an additional $106,472 MIP compared to today’s scenario. This affects the affordability of the buyers and pay more every month for the same house today.
Please see my other blog (http://activerain.com/blogsview/3618553/fha-mip-change-starting-april-1-2013-and-june-3-2013 ) in activerain for more detail information about these changes and their affect on the buyers.
What do we (as REALTORs) need to do?
The bottom line is that home prices are rising, interest rates will not stay at this record low rate for a long time, rules and fees for loans are changing toward higher cost to buyers, etc.
The buyers should be educated and be aware of these facts and changes and act soon, if they are really in the market. The sooner they buy, the better would be.