Saint Louis Real Estate-Market Watch January 30th, 2010

Real Estate-Market Watch by Art Wagner @ Keller Williams Realty Southwest Saint Louis , Sunset Hills, MO. January 30th, 2010
The Anatomy of St. Louis Real Estate

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The St. Louis Real Estate Market this week continues to show good signs of positive movement. Active listings are moving upward, along with the number of homes accepting contracts in the last 30 days (pending) . This activity has helped the pending ratio move up to 11.49% from 11.34% two weeks ago.

For the month of January 2010 compared to January 2009, we are about even as far as active listings and our pending ratios. However, at the end of January, we are showing almost 500 more homes sold from August 1st 2009 through January 30, 2010 opposed to the same six month time frame one year ago.

Obviously, First Time Home Buyer Tax Credits and Move-Up Buyer Tax Credits have played a part in this activity. Other contributing factors are also the low interest rates, affordability of homes in our market and of course, for those willing and able to fix up a house or a complete re-hab, there are awesome deals on distressed properties in our market.

Also worth noting is that the U.S. Department of Housing and Urban Development, HUD has recently announced changes to the FHA guidelines which will affect most anyone in the real estate market planning to finance their purchase through FHA.

There are three major changes coming in the near future:

1. Mortgage Insurance Premium-MIP- will increase, from 1.75% to 2.25%. This is the part of the mortgage insurance premium that an FHA borrower is required to pay up front at the beginning of the loan. Now, this amount can be “rolled ” into the loan amount, but it has been talked about and proposed that this be dis-allowed at some point in the future. There is also talk about shifting some of the up-front MIP costs over to the monthly MIP premium payments, thus having a bit less of an impact on the borrower at loan inception, but adding more dollars to the monthly payment.

2. Changes in minimum FICO credit scores. Borrowers with less than a 580 credit score would be required to have a 10% down payment. Most lenders these days are requring a credit score of at least 620 to qualify for an FHA loan at 3.5% down payment.

3. Reduction in amount of allowable seller concessions. This probably affects us in St. Louis the least, but FHA is proposing to lower the maximum seller concessions from 6% to 3%. In our market, it is very rare that you see a seller giving a buyer 6% of the purchase price of the home as concessions towards their closing cost, prepaid expenses or loan points. Our usual in this market has been 3% for some time. I’m sure you can find exceptions to this here in St. Louis, but this should affect more of the higher priced areas of the country, with higher FHA loan limits.

All of these changes, and possibly more are likely to occur sometime early this spring. That April 30th deadline for First Time Home Buyers and Move Up Home Buyers may be much more important now than ever. And…who knows what the government means by “early spring”.

We’ll keep you up to date as we hear more about the FHA changes and when they will go into effect.

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This entry was posted on Sunday, January 31st, 2010 at 8:27 pm and is filed under Real Estate News, St. Louis Market Reports. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.