· Mortgage Rates1 – You never know what is going to be the market driver for the week. Lately, a lot of the focus has been on economic reports and the anticipation surrounding whether they come in above or below expectations. But geopolitical / world events can also swing the market by driving macro-level demand for US Treasuries and Mortgage-Backed Securities (the so-called “safe haven” investments). While this week’s economic reports were generally negative for mortgages, with new home sales up 12.3% in September and the final reading of Q3 GDP coming in with a 4.9% annualized growth rate, the primary driver of our rate improvement was above average demand from investors in the 7-Year Note auction on Thursday. These days, we’ll take whatever we can get and are happy to say rates came down slightly to 7.75% (APR 7.813%).
· Weekly Market Data2 – We had a slight drop in Active Listings to 7,442, of which there were 862 new listings this past week. The number of listings which have been on the market for under 30 days continues to drop and is now at 36% of active listings, which leaves 64% in the ‘over 30 days’ bucket. Closed sales popped up slightly to 737, but Median Days on Market remained at 16 days (Source REColorado, all DMAR counties, this past week -Thursday to Wednesday).
· Columbine Team Insight – Offers were well received this week and we had 100% of them accepted. All of the properties had been on the market less than 30 days and two of them less than a week. As expected, those just entering the market went at list price, and those that had a little more time on the market included seller concessions. Overall, accepted offers were just slightly below list price.
· Market Trends – With both interest rates and home prices higher than they’ve been in a long time, affordability has taken a hit – particularly for first-time home buyers. However, with home price appreciation expected to continue to rise over the coming years (albeit at a more subdued pace), waiting for rates to drop and continuing to pay rent is not a great solution. Getting creative with renting out rooms for additional income can help, but unfortunately this doesn’t solve the loan qualification challenge. That is where a co-signer can play an important role – helping to bridge the income gap needed to meet underwriting requirements. It is important for the co-signer to understand they are obligated on the Note, and it will impact their ability to take out additional debt… but something that is less well known is that once the primary borrower has made twelve (12) consecutive on-time mortgage payments from their own account, underwriting guidelines allow for the co-signer to exclude the debt from their Debt-To-Income calculations.
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 7.750%, and a P&I payment of $3,439. The Annual Percentage Rate (APR) is 7.813% with a 0.087% discount fee ($418). 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 10/26/2023 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 10/19/2023 to 10/25/2023. 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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