Wednesday, October 23, 2013

Is the Market Slowing Down?

I've gotten this question quite a bit in the last few weeks. And it's a great question that is relevant to both buyers and sellers. If the market is "slowing down" (meaning less sales, which cause prices to go down), buyers could have an advantage and get good deals. Sellers on the other hand might have to reduce their prices or wait longer for buyers. This is basically what happened from 2008 to 2011. Lots of homes for sale, and very few buyers wanting to buy (though it was the bottom of the market! Hindsight is always 20/20). 

The best way to gauge a market is to find out how many homes have sold in the most recent month, and how many homes are currently available on the market (this is called Absorption Rate). Right now there are about 11,288 homes and condos on the market according to the MLS - which is more than in September. Last month 4,730 homes and condos sold.  This means that it would only take 2.3 months for all the current inventory to be sold, and that is still what would be called a "fast" market, but with more inventory. The average days a home is on the market in September was 39, which is also still blazing speed. 

The market was so hot from January to August that almost anything seems "cold" compared to it - the speed of sound seems "slow" compared to the speed of light. We never reached higher home prices in Metro Denver than we did around June.

Let me say that again: Home prices in Metro Denver a few months ago were even higher than the bubble in 2004! Wow! (Note: interest rates were around 6% in 2004, so the affordability was still much better in 2013.)  So though it's "slowing down" from a few months ago, it's still a pretty hot market.

This plays well for both buyers and sellers:

Looking to Buy? Things are "slowing down" right now compared to how blazing fast the market was from January to August. This means less competition, a bit more bargaining room on prices, and more options of homes for sale. Interest rates also went back down to 3.75% again, after getting close to 5% last month!

Looking to Sell? The market is still historically high, but isn't as blazing hot is it was earlier this year, which means that though you may not sell your home in 2 days, according to the numbers you'll still get about 8% more in price than if you sold this time last year, and about 17% more than in 2011. The average days on market are also still only 39 days, which is historically lightning fast.  

-The Denver House Guy

Monday, October 7, 2013

Government Shutdown Pushes Mortgage Rates Down

As a result of the federal government shutdown, fixed mortgage rates fell for the third consecutive week, Freddie Mac reports, ending at their lowest averages in nearly 4 months.
Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 3: 
  • 30-year fixed-rate mortgages: averaged 4.22 percent, with an average 0.7 point, dropping from last week’s 4.32 percent average. Last year at this time, 30-year rates averaged 3.36 percent. 
  • 15-year fixed-rate mortgages: averaged 3.29 percent, with an average 0.7 point, dropping from last week’s 3.37 percent average. Last year at this time, 15-year rates averaged 2.69 percent. 
  • 5-year hybrid adjustable-rate mortgages: averaged 3.03 percent, with an average 0.6 point, dropping from last week’s 3.07 percent average. Last year at this time, 5-year ARMs averaged 2.72 percent. 
  • 1-year ARMs: averaged 2.63 percent, with an average 0.4 point, holding the same as last week. A year ago at this time, 1-year ARMs averaged 2.57 percent.

Don't wait for rates to go back up!

Thursday, October 3, 2013

Mortgage Rates Take a Dip!

Mortgage rates took another dip this week thanks to the Federal Reserve's decision to stay the course on the stimulus bond-purchasing program.

The benchmark 30-year fixed-rate mortgage fell to 4.25 percent from 4.66 percent last week, according to the national survey of large lenders. That is GREAT news! The mortgages in this week's survey had an average total of 0.33 discount and origination points. One year ago, that rate stood at 3.55 percent. Four weeks ago, it was 4.62 percent.

The benchmark 15-year fixed-rate mortgage fell to 3.53 percent this week, compared to 3.7 percent last week, and the benchmark 5/1 adjustable-rate mortgage fell to 3.41 from 3.55 percent. The benchmark 30-year fixed-rate jumbo fell to 4.125 percent from 4.77 percent!

This is great news for buyers needing a  loan, but also for sellers since higher mortgage rates can affect the speed and price at which their home sells. Don't hesitate to take advantage of these amazing rates. You may regret it if rates go up!