· Mortgage Rates1 – The release of the Consumer Price Index was the focal point of economic data this past week. While the headline number came in slightly above expectations, the CORE CPI Rate (which is the Fed’s primary focus) came in line with expectations and dropped below 4.0% to 3.9% for the first time in two years, the mixed results helped rates generally end a bit better than last week, but not enough to move our benchmark rate which still stands at 6.500% (6.515% APR).
· Weekly Market Data2 – Our first full week of real estate activity in the new year did not disappoint with almost 700 news listings and just as many going under contract – the good news for buyers is that only 134 of the 697 new listings went under contract, so it was a nice ‘refresh’ of inventory. Both sellers and buyers seem ready to jump back in after a slow holiday season. Active Listings showed 4,882, no doubt impacted by the holiday, but we expect to see that figure start to tick back up as sellers put away the holiday decorations and start to get down to the business of preparing to list their homes. (Source REColorado, all DMAR counties, this past week – Thursday to Wednesday).
· Columbine Team Insight – Competition is back and while not white hot like it has been in the past (yet), it did result in only 33% of offers being accepted – one of the ‘lost to competition’ offers carried a substantial escalation clause, but it wasn’t quite enough. None had seller concessions and the one successful bid was 1% over list price. As always, this won’t be the case for every house, but buyers should once again be prepared to understand the impact of appraisal gap language in contracts and should have a solid understanding of their purchasing power with the new lower rates.
· Market Trends – As we begin 2024, many people take this opportunity to reflect on their goals for the upcoming year. Buying a home (or continuing to rent) is something that is always on the mind of prospective first-time homebuyers. Beyond the joys of not having a landlord and the ability to make your home your own, there are many financial benefits worth remembering. One of the most attractive of these is home appreciation. Currently the nationwide average annual appreciation is 5+% and Denver is 3+%, with forecasts for this to continue (or increase) in upcoming years. In addition to appreciation, taxpayers who itemize can often deduct mortgage interest expense, and the principal portion of the mortgage payment will gradually reduce the outstanding balance on the loan (increasing their equity position). People who decide to jump into homeownership will be investing in an asset that not only provides a roof over their head, but also a home that will deliver financial benefits for years to come.
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 6.515%, which reflects a lender credit of 0.272% ($1,306). 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 01/11/2024 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 01/04/2024 to 01/10/2024. 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.
Recent Comments