The game is changing in the real estate market, and things are looking good for everyone. Low mortgage rates and home prices gaining momentum, and the amount of buyers is supposed to increase this Spring.
This Spring expect to see these housing trends:
1. Fewer options, Higher prices & Bidding Wars
Expect some competition this coming Spring, demand from home buyers is growing faster than the supply of homes for sale, according to the National Association of Realtors. Expect to see multiple offers on the table which means bidding wars. In February there were 1.94 million homes for sale nationwide. That represents a supply of 4.7 months at that months pace. A balanced market requires about 6 months of supply. During the same period last year there was a supply of 6.4 months.
2. Loan Modifications Made Easier- for most
Homeowners behind on their mortgage payments may get the opportunity to reduce their monthly payments. The Federal Housing Finance Agency will require mortgage servicers to offer a streamlined modification program to borrowers with loans owned or guaranteed by Fannie Mae and Freddie Mac, starting July. The offers will be sent to home owners who are at least 90 days behind on their loans but no more than two years behind. The modification reduces the loans interest rate and extends the loan term to 40 years. Minimal paperwork is expected, borrowers wont be required to submit nay financial documentation to the lender to get approved. The loan modification becomes permanent after 3 three payments are made during the three-month trial period.
3. FHA Loans lose appeal again
Borrowers seeking low-payment mortgages will be charged for mortgage insurance for the life of their loans if they don’t get their Federal Housing Administration mortgages by June 2. The FHA currently requires borrowers to pay for mortgage insurance on FHA loans until the balance reaches 78% of the original value of the home.
4. Equity Loans & Cash-out refis
1.7 million homeowners regained equity in their homes last year, and an additional 1.8 million are close to it. All they need is home values to go up by another 5%. As home prices rise millions of homeowners might consider turning to their homes as a potential source for a loan. Cash-out refinances and home equity loans, which were popular during the housing boom, are slowly returning, along with the temptation to tap into equity.
5. Mortgage Rates Remaining Low
Mortgage rates are expected to creep up this Spring but should remain low. The mortgage Bankers Association estimates the 30-year fixed rate will reach 3.9% by the end of the first quarter of this year.