The number of contracts to buy existing homes rose as expected in April thanks to the tax credit ending on April 30th. Home sales are actually up 25% over April 2009 and reported a gain over March of 5.3%
Since then there has been a plunge of new mortgage applications. I like what Russell Price, a senior economist at Ameriprise Financial Inc. said, "This is the last hurrah for the housing market for a while...There will be a temporary hangover that will last a few months. The recovery will be a slow process that will take a few years."
I can say that personally, I have seen a huge increase in refinance applications and a serious slow down in purchase applications over the past three weeks. I think it is silly to make a move simply because of a tax credit. While it is a great incentive, it should not be the only incentive to buy.
In April the 30 year fixed was at hanging around 5.25% today they are as low as 4.75% on a $500,000 home with 20% down that saves you $122 a month! Think about it, lower rates, less competition, you will have less competition writing offers right now and will most likely get a better deal than you would have in April. Not to mention the savings over thirty years vs. the actual "cash" one receives from an $8000 credit. Getting off the fence while it is slow is the best buying strategy there is. My clients who purchased in December 2008 through February 2009 received the best deals I have ever seen. Why? Because there was NO ONE in the market!
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Very Truly Yours,