· Mortgage Rates1 – This past week’s notable news centered around the March CPI report. Consumer Prices rose slightly less than the market expected, which created a brief rally on Wednesday. That news was followed by a strong headline number for Producer Prices, but analysts noted that the larger than expected headline inflation was due in part to significant downward revisions to the prior month. By the end of the day Friday, the market had given up its earlier gains. Our benchmark rate held steady at 6.990% (7.013% APR) with a slight improvement on the pricing side.
· Weekly Market Data2 – Active listings surpassed the 7,500 level with very little fanfare. New listings outpaced those going under contract by roughly 300 homes, and we ended the day on Wednesday with 7,681 active listings that are ready for weekend showings. Median Days on Market expanded to 10 days. (Source REColorado, all DMAR counties, this past week – Thursday to Wednesday).
· Columbine Team Insight – We have been seeing the percentage of accepted offers increase each week and this week was no exception, we had 70% of offers accepted. There was a theme where buyers buying condominiums were able to negotiate seller concessions, but those buying single family homes around $600k had to compete and offered up to 4% over the list price. This is actually good news for many first-time home buyers who are often purchasing condos, the competition seems to be softening at the entry-level price points, and you may be able to negotiate funds to cover closing costs.
· Market Trends – With home prices continuing to increase each year and interest rates remaining stubbornly high, it is no surprise that qualifying for a mortgage is a bit more difficult than it has been in the past. In this environment, parents are becoming more involved; increasingly moving beyond just down payment support and signing onto the loan as a non-occupying co-borrower. By doing so, parents who are able to contribute a stable source of qualifying income can help many “would be” first time homebuyers bridge the gap to homeownership. Available for both conventional and FHA loans (but not VA or USDA), adding a parent as a co-borrower can help overcome hurdles related to income sources that require longer history (such as income from commissions, second jobs, or 1099 contracting work). This is great news for many first-time home buyers who want to leave renting behind but who may have more fluid income sources. Conventional loans will require 5% down (versus the minimum 3% down payment allowed for first-time homebuyers without a non-occupying co-borrower), but FHA loans still allow the minimum down payment of 3.5%.
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 6.990%, and a P&I payment of $3,190. The Annual Percentage Rate (APR) is 7.013%, which reflects a lender credit of 0.142% ($682). 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 05/16/2024 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 05/09/2024 to 05/15/2024. 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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