Spring in Indianapolis brings many changes. The spring real estate market in Indianapolis tends to be more active than any other time of year. This spring promises to be no different, and upcoming changes could significantly impact both buyers and sellers.
The Changes:
FHA Lending Changes: Recently FHA announced that starting April 5th upfront MIP will increase from 1.75% to 2.25%. On a $200,000 home that means an increase in cost to buyers of $965.
Expiring First Time Buyer Tax Credit- The first time buyer tax credit which was responsible for a vast majority of the homes that sold last year expires April 30. This means buyers must have accepted purchase agreements in place by April 30 and close by June 30th to receive the credit.
Interest Rates: Interest rates are going up. Simply stated, the government has been subsidizing rates to stimulate interest in home sales. Every sign now points to an end to those subsidies which means higher rates are on the way.
The Potential Impact on You
Buyers:For Buyers, especially 1st time buyers, waiting will cost you a great deal. For starters, you run the risk of losing the First Time Buyer Tax Credit. Second, your costs of sale may go up due to the increase in MIP and higher interest rates. Lastly by waiting you may pay more for your house. Last year when the first time buyer credit was scheduled to end, we saw a significant decrease in first time buyer homes and home prices went up 1-2%. Spring already brings higher demand...add these other factors and waiting could cost you a great deal, maybe even your dream home!
Sellers: For Sellers, this could easily be the best time in years to get your home on the market. Look at all the factors and very real time constraints facing buyers and ask yourself...what happens when all of this goes away. Common sense says that the housing market will slow down significantly after the expiration of the tax credit. Plus homeowners who have lived in their home 5 years can also receive a tax credit up to $6500 if they buy their next home by April 30, so waiting could cost you as well.
If you are considering buying or selling a home, contact a member of the Matt Borushko Team of Keller Williams Realty quickly. Acting fast can make a major difference in costs, and may be the difference between a successful transaction or not!