The Federal government is taking action to speed the housing market recovery by lifting the FHA 90-Day Seasoning Rule with the hopes that it will speed the resale of foreclosed properties.  This is great news for Denver homebuyers (especially first-time buyers) and investors, who up until now, have been required to wait at least 90 days after the previous sale date before being able to close with any buyer who has an FHA-backed mortgage.

Originally, the Department of Housing and Urban Development enacted the regulation in an effort to discourage investors who were flipping houses and driving up prices during the housing market boom a few years ago.  However, the rule’s unintended affect in today’s market has been to reduce the options of first-time buyers who already are competing for a shrunken supply of homes for sale.

Announced on January 15th, the one-year moratorium on the “anti-flipping” rule will begin on Feb. 1st.  Affectively, this will open a new pool of homes to first-time homebuyers.  It will also give buyers access to a broader array of recently foreclosed properties.  As an added bonus, it is not expected that this will have much effect on home prices, further stabilizing the housing market.

Many investors are thrilled because opening up their business to FHA buyers means they can now sell to anybody.  That hasn’t always been the case, and FHA buyers have often been left out of finding affordable homes that are move-in ready.  Today, next to FHA buyers, cash buyers make up much of the rest of the active market, and many of them are speculators and investors. This new rule will connect the two groups.

The new guidelines do require that investors who are reselling a home do not profit more than 20 percent above their purchase cost, but those limits are excepted if an independent appraiser confirms that renovations and repairs justify the higher price.

It is expected that the suspension of this 90-day rule will grow the number of transactions in coming months, and that will be good for our nation’s communities, as well as the real estate market in the Denver area.  More buyers for investors will motivate investors to buy and renovate more houses, which will serve to move the market forward.

Are you thinking of buying a Denver area home, a house in Castle Rock, or in any of our many other gorgeous surrounding communities?  If so, the time is now!  Let the Bandy Team serve you with our expertise and experience to make your dreams come true.

Marianne Bandy
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