· Mortgage Rates1 – This week the market was still digesting the release of the Fed’s 3rd Quarter ‘dot plot’, which shows where each FOMC member thinks interest rates will be by the end of the current year, as well as the following year. The 3rd quarter dot plot indicated over half of the FOMC members expect to need to raise the Fed funds rate another 25 bps before the end of the year (likely November), and that on average there will be only two decreases next year (previous dot plots suggested four decreases). The market did not like the message of “higher rates for longer” actually showing up in the data, and our benchmark rate moved up to 7.490% (APR 7.537%). In good news for sellers, we received the Case Shiller Home Price Index, which is the “gold standard” for measuring average home price appreciation, showing home prices continued to rise and we are now up 1% from last year.
· Weekly Market Data2 – The major change this week was the jump of Median Days on Market from 13 to 18 days! Only 675 homes closed while we still had 1,029 new listings hit the market, pushing our Active Listings up to 7,299 – it is unusual at this time of year to continue to see inventory grow. There is no doubt the rise in interest rates into the mid-sevens has had an impact. Homes are sitting longer, affording buyers less competition and more opportunity to negotiate. (Source REColorado, all DMAR counties, this past week -Thursday to Wednesday).
· Columbine Team Insight – This week we saw 67% of offers get accepted at an average of 1% below list price. The homes that had been sitting on the market for over 30 days had seen multiple price drops previously, and so while the accepted offers were near the list price, the list price had already decreased. Those that were new to the market had small reductions in price. Understanding a property’s history will help you analyze how to make a winning offer while optimizing your opportunity.
· Market Trends – The Close-Price-To-List-Price Ratio for August was 99.8%, showing that accepted offers are only a bit under list price, which is in line with what we have been seeing for months. This would indicate that there isn’t that much opportunity out there to get a good deal on a house, but that isn’t true. This statistic doesn’t capture all the previous price reductions the home went through to get to the current list price. Once a home hits a price that is in balance with the market it can go quickly at the new list price. The key to success is to keep looking even at homes slightly above your target price range – and when you find a home that could work, ask your realtor to keep an eye out for price reductions and be ready to pounce!
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 7.490%, and a P&I payment of $3,353. The Annual Percentage Rate (APR) is 7.537% with a 0.329% lender credit ($1,579). 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 09/28/2023 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 09/21/2023 to 09/27/2023. 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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