In working with Buyers, we often hear the familiar “We are waiting for prices to drop so we don’t overpay for the home.” If we used the actual graphic of when prices started to drop, we would need more room on the page! In Naples Florida, the market started dropping in August 2005. Some still predict the overall market will drop and others make headlines that Naples is the most over-corrected market in the country meaning prices have dropped too low.
All the latest statistics for the Naples real estate market indicate several encouraging points. First is that the number of closed sales is up and the listing inventory continues to drop. Those two indicators demonstrate the confidence buyers have in our market.
There are real factors that can increase the cost of housing if you wait to buy, specifically mortgages. Nationally, FHA accounts for a large percentage of the current housing loans and is expected to be even more prominent when the Qualified Residential Mortgage Guidelines go into effect next year.
- Rising rates are almost certain, due to looming inflation fueled by higher gas and food prices and the enormous amount of deficit spending
- FHA loan limits have been reduced – they are lower than conventional limits in most markets and FHA has suggested that they might be reduced further.
- FHA might increase the down payment to 5% or higher in an effort to have a more secure loan that will have less likelihood of going to foreclosure.
- FHA might decrease the amount of seller contributions in a similar move to require the buyer to have a larger investment in the home and therefore be a more “qualified” borrower.
- Congress may decide to increase the up-front MIP to build up the FHA reserves. The annual MIP has been adjusted twice since October 2010 when the Up-Front MIP was actually reduced.
- Due to tougher conventional requirements, demand for FHA loans could exceed maximum annual insurable limits. If Congress is having a hard time raising the limit on national debt, they might not even consider raising the limits for FHA.
In an effort to solidify the lending industry, qualifying is becoming harder for the buyer and more expensive at the same time. Many of the rules changes could go into effect next year. In addition, market factors could easily play a role in increasing buyer’s costs. Waiting will very probably require a larger up-front investment for buyers in the future.
We have excellent statistics and market strategies for our clients so please call any member of our Team Paradise to find out how we can help you make a wise move.
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