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March Madness
When things get crazy on Wall Street, it’s often good for real estate.
Uncertainty in the stock market attracts investors to the stability offered by Treasury Bonds.
Higher demand for bonds means lower interest rates which is obviously good for real estate buyers.
“Turbulence in the financial markets is putting significant downward pressure on rates” said Sam Khater, Freddie Mac’s chief economist.
After peaking at just over 7% at the end of October, rates have been trending down.
The current rate on a 30-year loan is 6.6%. A year ago it was 4.16%.
2022 Forecast
Yesterday we held the annual Real Estate Market Forecast with our Chief Economist, Matthew Gardner.
To get the recording of the full presentation, please reach out to your Windermere real estate broker.
Here are some of the big takeaways from Matthew:
- The national economy is very strong and the rate of inflation is expected to slow during 2022
- There are many millions more open jobs available versus the number of unemployed people looking for work
- Mortgage interest rates are expected to reach 3.85% by the end of the year
- Home price appreciation along the Front Range will again be in the double-digits this year due to high demand, low supply and low interest rates
- Home price appreciation is not expected to sustain the current pace over the next few years, but no price declines are expected
100 / 90 / 60
As you’ve probably heard, prices have gone up quite a bit along the Front Range.
Low interest rates, strong demand, lower supply, and a healthy local economy are all contributing to increased prices.
It may interest you to see exactly how much prices have increased since one year ago in the markets where we have the most activity.
Over the last year, Weld County has increased roughly $100,000, Metro Denver $90,000 and Larimer County $60,000.
Specifically, here are the average prices one year ago vs. today:
- Weld County = $426,000 vs. $523,000
- Metro Denver = $523,000 vs. $612,000
- Larimer County = $532,000 vs. $592,000
The Votes Are In
Real estate buyers made their voices heard last month and made a clear choice for… higher-end properties!
One of the interesting dynamics of our current market is the significantly- increased activity in higher price ranges.
The combination of high equity and low-interest rates is clearly causing people to move up. They are able to purchase the home that has the features they have always wanted whether it be size, finishes, or location.
The considerable equity growth that has occurred for homeowners over the last 7 years is allowing them to have sizable down payments on their ‘move up’ property plus today’s rates keep their monthly payments lower than expected.
Here are the numbers we researched which demonstrate this trend.
Compared to October of 2019, sales of properties priced over $750,000 last month were up:
- 176% in Larimer County
- 375% in Weld County
- 96% in Metro Denver
Properties in the $550,000 to $750,000 range also saw a large jump:
- 57% in Larimer County
- 63% in Weld County
- 83% in Metro Denver
This is a unique time in history for people to move up and own a home they have always dreamed about.
Rate Meaning
Mortgage interest rates have hit another record low this week.
Mortgage applications for purchases just hit an 11-year high.
Rates are at a level that many people could never have imagined.
Here’s something that is surprising to many people…
Rates are 1.5% lower than they were just two years ago.
Here’s what that means for buyers…
Pretend someone is looking at a $500,000 home and they will have a 20% down payment.
The difference in monthly payment is $320 between two years ago and today.
Obviously that is a significant amount of money.
Imagine what a person could do with $320 per month.
The fact that rates are at record lows is one of many reasons that the market is so strong right now and prices continue to appreciate at healthy levels.
