· Mortgage Rates1 – This past week was “jobs” week, where we receive several economic reports measuring employment and job openings. We started with the JOLTS report, showing job openings in October declined to 8.7M, which was well below expectations of 9.3M. Next, we received the November ADP Employment report which was also weaker than expected. These two reports show our economy slowing – which is a positive for the mortgage world because it suggests a continued decline in inflation. The bond market embraced this news and rates continued to slowly drift down another notch and our benchmark rate came in at 6.750% (6.788% APR).
· Weekly Market Data2 – We had a solid week of closings (820 homes), as was expected with so few happening the week of Thanksgiving. When taken together with fewer new listings (593 homes), our Active Listings moved lower to 6,319. Of the new listings only 70 went under contract, supporting the slowing market and allowing our Median Days on Market to slide up another day to 26 (Source REColorado, all DMAR counties, this past week – Thursday to Wednesday). Only 26% of listings have been on the market 30 days or less, making the remaining 74% of homes (which have been sitting for more than 30 days) prime targets for opportunistic negotiation.
· Columbine Team Insight – We are currently in a unique window of opportunity where interest rates have declined, but many buyers are waiting for the new year to start looking for homes. We fully anticipate that this will shift as we turn the corner into 2024 – and while rates may be lower, this increased attention will most certainly drive more competition… which can easily offset any short-term interest rate upside. For those who are actively in the market, we had 100% of offers this past week accepted at list price amidst competition.
· Market Trends – The one time of the year when paying a high mortgage interest rate sounds good is when you are taking that deduction on your taxes and reducing your taxable income! With rates in the sixes and sevens over the past year, and recent years of strong home price appreciation driving larger loan amounts, many homeowners are choosing to itemize their deductions so they can take advantage of the extra tax savings. With the 2023 standard deduction set at $13,850 ($20,800 for Heads of Households and $27,700 for those who are married, filing jointly), mortgage interest alone can quickly exceed the threshold for itemizing (the first 12 months of a $450k mortgage at a 6.00% interest rate will result in nearly $27k of mortgage interest paid). Add in Property Tax payments and a conversation with your Tax Professional should bring a little extra good news when you might not otherwise have expected it.
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 6.750%, and a P&I payment of $2,970. The Annual Percentage Rate (APR) is 6.788%, which reflects a lender credit of 0.124% ($568). 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 12/07/2023 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 11/30/2023 to 12/06/2023. 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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