This Market’s Target Buyer
April 17th, 2010 categories: Buyers, Money and Mortgages
When the market is skittish, prices and terms improve. Who benefits the most? Buyers with good credit, jobs, and the decision to buy now . Here’s a few good reasons to hurry:
- The overwhelmed Federal Housing Administration has announced changes to its policies that will take effect mid-year 2010. First the mortgage insurance premium will rise from 1.75% to 2.25% of all FHA-insured loans. Buyers must have a minimum FICO credit score of 580 to qualify for a conventional 3.5% down loan. Last, seller concessions such as paying for buyer’s closing costs will be reduced from six percent to three percent of the buyer’s loan. See Hud.Gov
- These proposed changes could stimulate buyers, along with first-time and move-up buyer tax credits, due to expire April 2010.
- In addition, prices are bound to attract buyers. The National Association of Realtors (NAR) 2009 Profile of Home Buyers and Sellers found the median prices of homes purchased in 2009 were nine percent lower than in 2008 and that 95% of those who financed purchased with a fixed-rate mortgage.
- Interest rates are expected to rise, but so far, falling stock prices and other economic jitters are keeping mortgage interest rates lower than expected. Right now, qualified buyers can still get a 30-year fixed rate loan around 5%.
So who is in the market for a home? Borrell Associates research says that the following demographics describe the next home buyer:
Market Homebuyer Demographics
- Average Market Household Income= $73,970
- Average Market Household size= 3.7
- Average Age=39.5
- Average Value of Current Owned Home= $285,388
- Average Years in Current Home= 8.5
Courtesy: Borrell Associates, copyright 2010
This buyer, a confident homeowner with equity and income, is looking for good deals. As evidence, consider what’s happening here in California, one of the hardest hit states during the housing “correction.” In December 2009, the state’s housing sales increased 1.7% and the median home price increased 8.4% over December 2008. Despite one of the largest inventories of foreclosed homes, California is down to a 3.8-month supply on hand, according to the California Association of REALTORS. A balanced market is widely believed to have six months of inventory on hand.
If you’re a qualified buyer, now is a good time to buy a home. Please feel free to call or email me to help you with this process. Also, don’t forget to become a fan of Kathy Villa Real Estate on Facebook. Follow the link on the left. We can’t wait to connect with you!