This past week our listings saw an average of 1.78 showings each. Activity is still a bit slow, but that is typical for this time of year given the upcoming holidays. Considering the market and economic conditions right now, I’m actually quite pleased with the holidays season showings we’ve had. I’m optimistic that some pent-up demand will be released after January 1 (i.e. buyers on the fence will pull the trigger).
Last week one of my trusted mortgage brokers called to tell me about a drastic reduction in mortgage interest rates. At that time, he told me about a 30 year fixed at 5.375% and a 15 year mortgage at 5.125%. If I recall correctly, the lowest rates we’ve seen in the last five years were during 2005 and they were very similar to these rates from last week. Its not likely to get much better.
This just got me thinking about what an amazing time it is for buyers, and specifically for first time home buyers. My thoughts are based on many factors:
1) In general, its a buyers market and prices have become very attractive.
2) Low interest rates make these already attractive prices even more affordable. Every 1/2 point reduction in mortgage rates equates to $42/mo less per $100,000 borrowed.
3) FHA is still offering low downpayment loans (currently 3.5% down).
and last but NOT least
4) The Federal Government is offering up to a $7500 tax credit for first time buyers for a limited time. This could cover the downpayment on a $200,000 home! Have the seller pay closing costs and you are virtually back to buying a home with no money out of pocket.
If you know anyone who would qualify as a first time homebuyer, do them a favor and tell them about the reasons why they should buy now. There’s a perfect storm going on right now and it won’t last.