· Mortgage Rates1 – This week was “inflation week” with both PPI and CPI reports being released, but the conflict in Israel overshadowed the market. Rates improved on Tuesday and then held steady on Wednesday with the release of the September Producer Price Index report even though producer inflation came in hotter than expected. On Thursday we received the September Consumer Price Index report which also came in higher than expectations showing overall inflation increased 0.4% (versus estimates of 0.3%) and year-over-year inflation remained at 3.7%. The market reacted to this negative news and rates lost the ground they had gained earlier in the week leaving our benchmark rate at 7.625% (APR 7.693%).
· Weekly Market Data2 – Active listings saw a sizeable increase this past week to 7,458 of which 40% have been on the market under 30 days, and therefore 60% have been on the market for a month or more. We saw just over 1,000 new homes get listed and had a slow week of closings with only 649 homes being sold. Probably the most interesting market indicator was the percent of new homes listed that went under contract in the first week which was only 13% – this is the lowest we have seen this year (we saw this metric peak near 50% in early April) yet another sign that the market has slowed. (Source REColorado, all DMAR counties, this past week -Thursday to Wednesday).
· Columbine Team Insight – We had 67% of offers accepted this week for an average of 4% below list price. We saw competition for well-priced homes that were new to the market and below list offers accepted for those that had been sitting. With more and more homes sitting each week, opportunities for buyers willing to brave the rates will be rewarded.
· Market Trends – With the rise in home prices in Denver we are seeing many buyers turn to purchasing condominiums as a more affordable option. Condos come in all shapes and sizes; ranging from basic units with few amenities to full luxury buildings with all the amenities. Government loans such as VA and FHA require condos to be on an approved list, but conventional loans currently do not. In an attempt to identify condos with major deferred maintenance projects and potential large special assessments being levied in the future, Fannie Mae and Freddie Mac have started requiring the HOA management companies to directly address these items in an addendum to their standard questionnaire. While this may make financing some condominiums more challenging in the short term it should drive better accountability for maintaining buildings over the long term. It is important to work with a lender that understands these rules and can identify potential issues early in the process.
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 7.625%, and a P&I payment of $3,397. The Annual Percentage Rate (APR) is 7.693% with a 0.056% lender credit ($269). 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 10/12/2023 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 10/05/2023 to 10/11/2023. 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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