More Cuts in Home Prices?7 months ago
Fewer home sellers have cut down their home’s listing prices as buyers rushed out to beat the increasing rates of interest and expiring tax credit.
As of the New Year, prices on 21% of homes were cut down at least once, 22% lower from the past month and 25.6% lower from two months ago. The amount of sellers lowering their asking price has gone down to extreme lows since last year while the average discount in homes with price reductions remained unchanged at 11% from the original prices.
If you happen to be a qualified buyer with a secure job, now would be the ideal time to get into the market due to the incredibly low borrowing expenses and the incentives of tax credit, which are the ultimate in price reductions for today’s home buyers. Unfortunately, both seem to be fleeting.
Average rates of mortgage within three decades have jumped from 4.71% to 5.14%, which slipped at the coming of 2010 but has gone to 6%.
With the rates still quite low and the tax credits still existing, home sellers have cut down by $21.2 billion from their asking prices, lower by 14% from last month and even more from two months before that.
Buyers that want to lock into the first-time tax credit or move-up credit of buyers have to sign up by the end of April, as well as close their loans by the time June ends. Sellers are likely to come face-to-face with the prospect of asking less for homes since these incentives tend to vanish while the borrowing expenses rise. Reductions are expected to rise again, as well, now that the extension deadline of tax credit is coming closer. However, mortgage rates are also expected to rise again, so they might cancel savings out from reductions in list prices.
The industry in our country is expected to look like a rollercoaster ride this year. Although several improvement signs have come about, 10% of today’s work force is still unemployed, thus clouding any outlook for the recovery of housing. Hopefully, things will stabilize by 2011.