Embrace the Market and Make the Most of the Moment

• Mortgage Rates¹ – Rates moved slightly higher this week and our benchmark rate is now at 6.875% (APR 6.948%) on the heels of Fed Chair Jerome Powell’s semi-annual testimony to the Financial Services Committee in the House of Representatives and the US Congress.   He reiterated the commitment of the Fed toward their 2% inflation target, acknowledging it is still far from being met and that the Fed is likely going to hike more this year.

• Weekly Market Data² – We have seen a steady trend in the data over the last month, with all of our key metrics pointing to a slowing market.  The number of Active listings is up to 5,658 but this is primarily driven by more homes sitting on the market longer versus a continuing increase in new listings (which were down 9% from last week with 1,211 homes listed).  Of the Active Listings, the percentage of homes listed within the last 30 days continues to drop, down another 2%.  Lastly, the Median Days on Market for homes sold last week increased another day to 8 days.  (Source: REColorado, all DMAR counties, this past week -Thursday to Wednesday).

• Columbine Team Insight – After several active weekends, we saw activity slow this past weekend as the combination of Father’s Day, Juneteenth and some very welcomed warm weather arrived.  The market is definitely a mixed bag of (a) solid competition for well-priced homes and (b) offers substantially below list price – with the primary difference being the length of time the home had been on the market.  For our part, we are not seeing offers that are substantially ‘over ask’ (>5%) – perhaps they are out there, but not among our clients or among our realtor friends.  If you are looking for negotiating power, looking at homes that have made it through the first week of listing seem to be the best bet (we are seeing more and more of them).

• Market Trends – It’s hard to believe it’s been a full year since interest rates moved into the six’s, but you might be surprised to know that this is the first time the year-over-year comparison is actually within 1% (vs. the 2%, 3% and almost 4% differences we were seeing through the end of last year).  At the same time, the real estate market has shifted dramatically from an unhealthy, uber competitive free-for-all to a somewhat more level playing field that is seeing more rational offers built around comparable sales.  While we still think of this as a seller’s market, it is more inventory-driven (vs frenzied demand-driven), and we are not seeing a lot of appetite to push the pricing envelope.  Even among buyers who have missed out previously, there is a willingness to draw their line and move on to the next.  We are seeing that buyers are more often able to negotiate better terms, such as: (a) keeping protective deadlines like appraisal, and loan availability; (b) negotiating full inspection resolutions above health and safety items; (c) very few appraisal gaps needed; (d) seller concessions requested; (e) contingent offers; (f) reasonable timelines; (g) paid post occupancy arrangements; and, of course, (h) below list offers.  While it would be great to have lower interest rates (trust me), it might just be a good thing to keep competition on the sidelines and help you maximize your negotiating power… buying now when you have some leverage and refinancing when the opportunity presents itself.

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 6.875%, and a P&I payment of $3,153.  The Annual Percentage Rate (APR) is 6.948% with a 0.160% discount fee ($768).  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 06/22/2023 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 06/15/2023 to 06/22/2023.   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.