The Fed is winding down their mortgage back securities purchase program which is set to expire on 3/31/2010  The best guestimate as to the rate impact this artificial demand is having on interest rates is somewhere between .5% to .75% in rate.  In addition, the $8,000 tax credit is set to expire on 4/31/2010.  I find it amusing that the two are set to expire so close together.  All we hear from Washington is that they want to “unwind” the stimulus gradually.  Well in the span of 30 days the two main logs in the housing market fireplace are about to be water logged.  I think it will be very interesting to see what happens to housing prices once these two programs come to end.  There are two scenarios:  First, enough people believe the housing market has bottomed and the seasonal spring and summer homebuying demand will carry-on regardless of  no tax credit and rising rates.  This then begs the question…how much of this stimulus was really necessary or did just plain old economics fix the market.    Scenario two, is that we hear a gigantic thud in the housing market come summer.  If the stimulus is pulled out and as a result less buyers come to the table we may see inventories rise and pricese begin to fall again.  There are still millions of homes yet to come on the market via short sale and foreclosure.  In my opinion, the banks have been keeping this phantom inventory tight to their vest and are in no hurry to sell it.  They have already written most of these assets down so when they sell it on the upswing they stand to post some healthy profits. Unfortunately, I beleive this to be the most likely outcome.  Not because there aren’t going to be buers…I think there is just going to ben an ongoing glut of short sales and REO properties coming on to the market as more and more families are wiped out by unemployment and what will soon be rising interest rates on their ARMs and HELOCs.

June and July should tell the tale!

• Closing Costs
• The purchase of a new Whirlpool appliances by Fannie Mae
• A mix of costs and appliances at the buyers discretion, up to a max of 3.5%.

This special runs from 1/28/2010 to 5/1/2010.   Just another incentive for homebuyers to make the move towards homeownership in 2010. 

 For more information regarding this program visit efanniemae.com or give us a call.