· Mortgage Rates1 – After the excitement of last week, it was a relatively quiet week with our benchmark rate holding at 6.375% (6.414% APR). We did receive the final reading of Q3 GDP which showed that the US grew at a revised annual pace of 4.9%, down from the 5.2% cited in the November update. Within the GDP report there is also a quarterly PCE (Personal Consumption Expenditures) reading, showing how much inflation rose from Q3 of 2022 to Q3 of 2023. This figure was also revised lower from 2.3% to 2.0%, which is not quite the same as the Fed’s primary inflation benchmark, Core CPI, but is significant nonetheless because it supports the market narrative that the Fed is (or should be) done raising the Fed Funds Rate.
· Weekly Market Data2 – It is no surprise that we saw few new listings – only 404 this past week. With 663 closed sales, total active listings drop by 8% to 5,573. Now that Christmas is right around the corner, many sellers and buyers will be taking a ‘pause’, choosing instead to focus on quality time with family and friends. Also not a surprise, our Median Days on market increased to 33 days and we may see this increase again before it peaks and then starts to reverse trend in the new year (Source REColorado, all DMAR counties, this past week – Thursday to Wednesday).
· Columbine Team Insight – We had a surge of activity in the last week as buyers took advantage of the homes that are on the market and the lower interest rates; when the dust settled, we had 86% of our offers accepted. On average, accepted offers were 2% below list price with a combination of seller credits and purchase price reductions. As expected, this is on a case-by-case basis, and we did see competition on several homes leading to a couple of ‘over list’ offers. If rates remain stable (or even continue to decline further), we can anticipate a busy spring market, hopefully with an increase in inventory to offset the growing demand.
· Market Trends – ‘Tis the season for giving, and with home prices continuing to press higher, giving the gift of homeownership in the form of down payment ‘gift funds’ might just be the best stocking stuffer of all. For lenders, the ‘gift funds’ terminology is used to distinguish funds that are coming from an eligible source (such as a family member or fiancé), and which do not need to be repaid. Mortgage gift funds are allowed for the purchase of primary residences and second homes, but not for investment properties. For a 1- and 2-unit primary residence, 100% of the down payment can be in the form of a gift. Similarly, for second homes with a downpayment of 20% or more, 100% of the funds can also come from a gift, but otherwise a second home requires a minimum borrower contribution of 5%. Gift funds are allowed from a relative, a trust established by a relative, or the estate of a relative, as well as from unrelated parties if they are received in the form of a wedding or graduation gift within 90 days of the event. Programs offered by certain public agencies and employer assistance programs may also be considered as ‘gift funds’, although they are subject to additional conditions. What a wonderful present to unwrap!
NOTES:
(1) The mortgage loan scenario presented assumes the purchase of a primary residence, excellent credit, an 80% loan-to-value (LTV), a loan amount of $480,000, a 30-year fixed interest rate of 6.375%, and a P&I payment of $2,994. The Annual Percentage Rate (APR) is 6.414%, which reflects a lender credit of 0.050% ($240). Monthly principal and interest payments, which will continue for the stated term until paid in full, do not include mortgage insurance, property taxes or homeowners’ insurance premiums and actual monthly payments may be higher. Interest rates are current as of 12/21/2023 and are subject to change at any time without notice. All loans are subject to credit approval. Other terms and conditions may apply. Not all loans or products are available in all states. Regulated by the Colorado Department of Regulatory Agencies, Division of Real Estate.
(2) Source: REColorado®, Inc for the period 12/14/2023 to 12/20/2023. Data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties. This representation is based in whole or in part on content supplied by REColorado®, Inc. and REColorado®, Inc. does not guarantee nor is it in any way responsible for its accuracy. Content maintained by REColorado®, Inc. may not reflect all real estate activity in the market.
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