· Mortgage Rates1 – This week we received the August Consumer Price Index (CPI) report that showed overall inflation increased by 0.6%, which was in line with estimates, and year over year CORE CPI (which strips out food and energy prices) decreased to 4.3%, which was as expected. We also received the July Producer Price Index (PPI) report, which was hotter than estimates largely due to energy prices, but since it was coming from a very low level and remains below 2% on a year-over-year basis, it didn’t cause significant rate movement. Overall, our benchmark rate dropped slightly to 7.125% (APR 7.198%).
· Weekly Market Data2 – New listings jumped this week to 1,193 as those who waited until after Labor Day weekend to put their home on the market moved forward with listing. Couple this with a slow week of closings, only 670, and Active Listings popped up nicely to 6,945. Of the new listings, 20% went under contract in the first week and there are now 2,826 homes which have been on the market under 30 days. While not hot, the market did warm up some and we saw our Median Days on Market drop from 14 to 11. (Source: REColorado, all DMAR counties, this past week – Thursday to Wednesday).
· Columbine Team Insight – We had 100% of offers accepted this week with little competition and accepted offers were near list price. As could be expected, price reductions or seller concessions were seen on homes that had been on the market for more than a week and those just listed came in at list price or slightly above – the amount of time a home has been listed matters.
· Market Trends – With the market softening and less competition, lower down payments are being accepted as sellers look to a wider range of potential buyers. Down payment assistance programs (DPA) can fill the gap between the funds that are available and those that are needed for a purchase. There are a range of available programs, so it is important to understand their differences and select the one that is best for you. Most offer assistance in the range of 3-4% of the loan amount to cover the minimum down payments needed, which means you will most likely still need funds for closing costs and pre-paid expenses (or hope to negotiate a seller credit). All DPA programs have income limits, and most are a 2nd lien on your property in lieu of a grant. While the 2nd lien is most often a ‘silent’ second, it is important to understand the terms, including the interest rate (if any), repayment triggers, associated deed restrictions, and whether it is forgivable over time. If you are unsure of how to navigate the maze of options, we would be happy to help.
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 7.125%, and a P&I payment of $3,234. The Annual Percentage Rate (APR) is 7.198% with a 0.008% lender credit ($38). 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 09/14/2023 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 09/07/2023 to 09/13/2023. 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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