Sellers are getting busy listing and buyers are staying active. Listing inventory in West Savage rose since last month, and pending activity is holding steady. Not bad for March in Minnesota. It's no surprise that the spring-like temps have buyers and sellers alike setting their real estate objectives to task.
Big changes are coming to FHA loans starting April 1. Currently, FHA charges a 1% (of loan amount) up-front mortgage insurance premium (MIP) that be financed or added to closing costs. There is also a monthly MI premium. For 30-year fixed rate mortgages, annual MIP is equal to 1.1% of the loan size for LTVs of 95% or lower. For everyone else, annual MIP is 1.15% of the loan size.
Effective April 1, the MIP rate will be increased to 1.75% of the loan amount. These annual MIP fees change too, climbing by 10 basis points across the board, and by an additional 25 basis points for loans between $625,500 and $729,750. In other words, the cost of obtaining an FHA mortgage will be increasing on April 1. The increase is to combat the cost of insuring mortgages of the high number homes that went into foreclosure.
Single family and townhome inventory in Savage has held steady. Scott County (as a whole) single family inventory is on the rise. Our West Savage absorption rate is 2.85. That means if zero new homes come on the market, it will take 2.85 months to sell our existing inventory.
We said it last month and we will say it again this month. From an inventory perspective, we are officially in a seller’s market. From a pricing perspective, we are still in a buyer’s market. While pricing typically rises as inventory falls and demand increases, distressed market inventory is keeping the lid on appreciation. The good news is that pricing is holding steady. We expect that if inventory continues on this path, mild appreciation may be likely. The caveat here may be appraisals. See our February 13 article on appraisal changes at www.WestSavageBlog.com.
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