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YOUR RESIDENTIAL PROPERTY MANAGEMENT EXPERTS |
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State of the Market & Mortgage Rates |
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As we approach the end of Spring and prepare for Summer, our real estate market continues to feel much like it did in the Fall. Our market continues to gain steady strength and traction, with positive indicators that should continue to provide us with near term appreciation. As members of the National Association of Residential Property Managers (NARPM), our Denver Chapter hosted an Economic Update that featured an Economist from the Colorado Division of Housing. He confirmed and forecasted, through several variable metrics, that we should expect to continue our recovery in the Real Estate and Property Management sectors. Developers are still challenged with financing from banks to start breaking ground on new construction projects, and potential homeowners are similarly challenged in achieving the premium interest rates available with existing stringent bank loan requirements. The market imbalance of supply and demand is projected to remain with us for a few more years, resulting in continued strong demand for rental property and strong rental rates; until developers can build out to relieve the existing imbalance.
The inventory of homes available on the market remains at historic lows, which allows The Law of Supply and Demand to enable strong Rental Rates and Sales Pricing. Buyers are lining up to review newly available homes, and we're seeing multiple offers and bidding wars on properties for sale. Incredibly enough, owners who would like to sell and move up or down in home size are concerned of being homeless by selling their home quickly and not being able to procure a new home in time; thereby adding to the lack of inventory on the market. The available inventory for rental properties mirrors the low inventory levels of properties for sale, so Owners/Investors that wish to sell are enjoying a Sellers Market, while those who continue to rent out their properties are enjoying a Landlords Market.
It's not all bad news for those that want to purchase a home, as lending rates are still at historic lows.
For over the last several weeks, mortgage rates have inched higher, continuing to climb from all-time lows, Freddie Mac reports in its weekly mortgage market survey. The 30-year fixed-rate mortgage-the most popular among home buyers-has now climbed a half percentage point since last month.
A strengthening economy and positive employment report this month prompted fixed-rate mortgages to climb higher this week, says Frank Nothaft, Freddie Mac's chief economist.
Freddie Mac reports the following national averages with mortgage rates for the week ending June 13:
- 30-year fixed-rate mortgages averaged 3.98 percent, with an average 0.7 point, rising from last week's 3.91 percent average. A year ago at this time, 30-year rates averaged 3.71 percent.
- 15-year fixed-rate mortgages averaged 3.10 percent this week, with an average 0.7 point, increasing from last week's 3.03 percent average. Last year at this time, 15-year rates averaged 2.98 percent.
- 5-year adjustable-rate mortgages averaged 2.79 percent, with an average 0.6 point, rising from last week's 2.74 percent average. Last year at this time, 5-year ARMs averaged 2.80 percent.
- 1-year ARMs averaged 2.58 percent, with an average 0.4 point, holding the same as last week. A year ago, 1-year ARMs averaged 2.78 percent.
"With the ongoing run-up in fixed mortgage rates, adjustable-rate mortgages (ARMs) are becoming more popular among home owners looking to refinance and for home purchasers," says Nothaft.
If you're thinking of home ownership and would like several lender referrals that you can speak with regarding your financials, budget, and what loan type may be best for you; please contact Kevin Chard and he'll be happy to provide you with several high quality lenders for you to review and plan with.
Source: Freddie Mac |
May 2013 Boulder Area Market Sales Statistics |
By clicking on this link, you'll access the Boulder Area Realty Associations May 2013 statistics on Year over Year comparisons on Housing (Single Family Homes) and Condo/Townhome Sales broken down by town in Boulder County.
The Median Sales Price provides a more accurate sales figure over the Average Sales Price, resulting in near across the board increases in price over 2012's figures, while the Average Days to Contract figure enjoys a near universal drop as well.
As noted, the inventory of homes available for sale remains very tight. As of mid-April, there were 663 single family homes available for sale across all of Boulder County, an amount down just under 58% when compared to the five year average. Amazingly, we have only 43 additional single family homes for sale as compared to the number we had at the start of January. There were 599 homes under contract during this same time period, an amount 20% greater than the five year average. The total number of single family homes on the market, both available and under contract is 1,262, an amount 39% below the five year average.
So as a potential homebuyer, what does all this data mean to me? Unfortunately from a Buyers perspective, we're in a Seller's market due to the imbalance of high demand and low supply of available housing inventory. The good news is that mortgage rates are still at near historical record lows, so your dollar will stretch a long way in purchasing more home for you.
With low mortgage rates, home owners and buyers are unlocking big savings in financing a home purchase. For example, Tim Iacano of Iacano Research explained in a recent TIME magazine article how big of difference low rates are making in boosting home buyers' purchasing power. He notes that a buyer could purchase a house worth $280,000 and have a $1,100 per month mortgage payment if he's able to get a low mortgage rate of 3.3 percent.
"Even if mortgage rates moved back up to their 20-year average rate of 6.5 percent (what many thought were simply unbelievable rates when they first dropped that low last decade), that same $1,100 mortgage payment would finance a home purchase of just $193,000, not the current $279,000," Iacano notes. "The difference between these two prices is nearly 50 percent!"
Unfortunately, one of the things that seems to get lost in all the talk and indicators of the current market strength is a sense of the past. Yes, the market has substantially improved over where it was, and all indicators and trends suggest continued cautious momentum and appreciation in the right direction. No, that doesn't mean that a particular home or area has recovered all of the value it may have lost during the downturn, contingent upon when it was purchased and for how much, and taking into account its loan structure.
If you have any questions or concerns on how to move forward and make the shift from tenancy to home ownership, please be sure to let us know; as I'm happy to serve as your reference and resource for your Real Estate needs. My email is Kevin Chard (kevin@phoenixrealtyinc.com) and I may be contacted in the office at 303-666-4300; I look forward to working with you!
*All data taken from April/May 2013 Boulder Area Realtor Association |
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