· Mortgage Rates1 – The big surprise of the holiday-shortened week was Retail Sales, which rose 0.6% in December vs. expectations of 0.4%, and what is referred to as ‘Core’ Retail Sales (excl autos, gasoline, building materials, and food services) rose 0.8%, roughly 4x the expectation of 0.2%. The second surprise was Initial Jobless Claims dropping to $187k, which is its lowest level since the late 1960s. Both reports can contribute to inflationary pressure and, consequently, interest rates pushed higher. Our benchmark rate, which is still tracking at 6.500% (6.546% APR) became a little more costly.
· Weekly Market Data2 – Continuing the trend, this was another week of roughly 750 new listings and roughly the same number going under contract – even though top-line active inventory remained relatively unchanged at 4,894, these new listings have served to ‘refresh’ the stock of available inventory. After two weeks in a row of 700+ going under contract, it seems that the market is building a solid footing for the new year. (Source REColorado, all DMAR counties, this past week – Thursday to Wednesday).
· Columbine Team Insight – We had a reasonable jump in the number of offers extended this past week and saw good success, with 80% making it under contract. The one ‘loss’ came in the face of stiff competition; multiple offers and a final price that went well over the list price on the first weekend the home hit the market. On the flip side, we also had a contingent offer accepted, which reaffirms that it is still possible in the right situation. Our average offer was just a bit under the list price, but in a bit of a shift, none of the final contracts included seller concessions. Now is definitely the time to lean into your real estate agent to get a feel for the competition on a home and help strategize an offer.
· Market Trends – In the mortgage world, the term ‘Funds to Close’ refers to all of the funds that a borrower will need to effect the transaction, including their down payment, closing costs, and prepaid expenses. While many buyers have a general plan for delivering these funds (often discussed and documented during the pre-qualification stage), it is not uncommon for the final details to shift when it comes time to deliver the funds to the Title Company. Funds to Close can come from a wide range of eligible sources such as the equity in an existing home, gifts from family, 401(k) loans / retirement plans, or investment accounts, but sometimes actually converting those eligible sources into usable cash can take time and may require additional documentation. With closing timelines routinely less than 30 days, we recommend working through the details in advance so that we can (a) maintain maximum flexibility while also (b) avoiding any unexpected delays. Keeping an eye on the details is part of what we do, and we are happy to help guide you and our mutual clients through this process to keep it simple and ensure a ‘no drama’ closing for everyone involved.
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 6.500%, and a P&I payment of $3,034. The Annual Percentage Rate (APR) is 6.546%, which reflects a discount fee of 0.229% ($1,099). 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 01/18/2024 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 01/11/2024 to 01/17/2024. 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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