July Quick Stats
Denver Metro Single
Family Housing Stats:
Active Listings: 9,087
Under Contracts: 4,181
* Up 23% from July ‘11
Solds: 3,713
* Up 20%
from July ‘11
Average Price: $312,920
* Up 5%
from July ‘11
Average Days on Market: 64
* Down
35% from July ‘11
Denver Metro Condo
Housing Stats:
Active Listings: 1,740
Under Contracts: 1,055
* Up 22%
from July ‘11
Solds: 905
* Up 20%
from July ‘11
Average Price: $190,269
* Up 24%
from July ‘11
Average Days on Market: 69
* Down
37% from July ‘11
Real Estate News – Historically Low Interest Rates!
As we discussed a few months ago the Home Affordability
Index (HAI) is at its highest recording ever in the metro Denver area. Just
like it sounds, the HAI is a measure of how affordable homes are in a given
location. It’s calculated by comparing the median price of a home in the Metro
Denver market to the median worker’s income level, taking into account the
current interest rate for a 30-year fixed rate loan. What this means is that
the median income earner can buy more house today than ever before. Why?
Because home prices, while rising quickly, are still well below their peak
prices of 5-6 years ago and interest rates are at never-before-seen historic
lows. It’s interest rates that continue to make homes so wonderfully
affordable, so let’s dig into this a bit.
The typical rate on a 30-year fixed mortgage tumbled below
3.5% for the first time last week, the latest record low in a trend that has
fired up homes sales around the country. Freddie Mac's weekly survey of what
lenders are offering to qualified borrowers showed the 30-year rate at an
average of 3.49%, down from 3.53% the week before. The 15-year fixed loan fell
from 2.83% to an almost unbelievable 2.8%! Let’s put this in perspective. In
late July 2010 and 2011 the typical 30-year rate in the Freddie Mac survey was
just over 4.5%, more than a percentage point higher than now. The 30-year rate
was above 6% in 2006 and most of 2007, over 8% back in 2000, and over 10% in
1990. Back in the bad old days of inflation, the rate topped 18% in 1981. Look
at how the interest payments affect your monthly Principle and Interest payments:
$200,000 property in 1981 at 18% interest: $3,014
$200,000 property in 1990 at 10% interest: $1,755
$200,000 property in 2000 at 8% interest: $1,467
$200,000 property in 2007 at 6.5% interest: $1,264
$200,000 property in 2011 at4.5% interest: $1,013
$200,000 property in 2012 at 3.5% interest: $898
What’s more,
according to a recent CNN Money article the average cost of closing on a
mortgage has fallen by 7.4% over the past year. At the end of June, a homebuyer
looking to close on a $200,000 mortgage with 20% down paid an average of $300
less than 12 months earlier.
No one knows how
long these historically low rates can last. But in the meantime my clients are
taking advantage of them to buy the homes of their dreams and lock in
once-in-a-lifetime interest rates.
Buyers – Denver Has Highest Appreciation of Top 30 Cities
A few months ago the National Association of Realtors (NAR)
ran a study to determine the home equity gain/loss for homes in the 30 largest
U.S. cities over the past three years. They ranked the cities from largest
average loss in home equity to largest average gain in equity. While there was
little surprise that the usual suspects like Las Vegas and Los Angeles have
been among the poorest performers, most of my clients have been shocked to see that
metro Denver has had the HIGHEST APPRECIATION OF ANY OF THE TOP 30 U.S. CITIES
FOR THE PAST THREE YEARS! Those of us who watch the market as closely as I do
were not surprised by this, but for those who don’t, it has come as a most
welcome surprise. The fact is that Denver is in the middle of a robust, even
historical, real estate recovery that is leading the nation.
Of course no one knows what the future holds. Over time
prices will go up and prices will go down, that much never changes. But there’s
no denying there is much more confidence in the housing market than there has
been for years and this confidence has my buyers excited to see what’s out
there. Let me know if you’re curious and want to check out some homes, I’d be
happy to show you!
Sellers – Number of Home Sales Highest in 5 Years
We have been discussing for months the incredible turnaround
in our housing market. If you’re looking to sell your home this should be very
welcome news! One of the key metrics of this recovery has been the high number
of homes sold in the past few months. The graphic shows home sales per month
for the past seven years. Note that the number of homes sold peaked in 2005 and
2006 and has fallen ever since. But recently this trend has reversed itself.
Starting in March of this year the number of homes sold began jumping upwards,
from April with 3,133 to May with 3,768 to June with 3,981. June’s numbers are
almost equal to those of 2007 when the market was just starting to slow down.
For you as a seller what this means is that it might be a
great time to sell. The inventory of homes on the market is at all-time lows,
prices are up, and home sales are up as well. Call me and I’ll be happy to run
a complimentary Comparative Market Analysis on your home to let you know what
it might be worth. It’s great information and costs you nothing!
Investors – Low Vacancies Helps Landlords
Over the past few months we’ve talked a lot in this
Newsletter about why so many investors are buying rental properties in metro Denver.
The graphic shows one of the reasons why. The vacancy rate is a big driver of how
well a rental property performs for a number of reasons. First, the lower the
vacancy rate the higher the demand for the property. More demand means
landlords can be more choosey selecting their tenants, and also can charge
higher prices. In fact, rental rates increased by 4.5% in 2011, the highest
jump in 10 years.
One of the reasons vacancy rates are so low is that many
people cannot qualify for a loan. I don’t expect this to change for the
foreseeable future. We’ve had a huge shakeout in the lending industry, and
lending guidelines are much stricter than they were a few years ago. Until
lending standards ease up I expect vacancy rates to remain low and keep my
investor clients happy. If you’ve ever thought of investing in a condo or house
as a rental property call me and I can show you what the numbers look like and
what options you have.
YCRE in the News – Your Castle is 5th Fastest Growing Company on Front Range!
Your Castle is proud to announce that according to last
week’s edition of the Denver Business Journal in 2011 we were the 5th
fastest growing company of any kind (not just real estate) in the $6.1 - $17.4
Million dollar category! We grew 93% in the past year serving customers like
you one at a time with the market knowledge and respect you deserve. We are
proud of this achievement but prouder still to work with great customers like
you!
Mortgages – Tips to Qualify fo a New Loan
The mortgage market is staying hot with interest rates at
all time lows. If you haven’t reviewed your options lately it may be a
great time to take a look at your options to refinance, or your options to
trade-up to a bigger home with a lower payment (call me and I’ll tell you how I
can help with this!).
But before applying for your new mortgage make sure that you
are in good shape with the 4 items needed for a new loan:
- Income – Make sure your income is remaining consistent and your tax returns are reflecting your total annual income.
- Credit – For the very best rates you want to have a credit score of 740 or greater. There are loan options for clients all the way down to a 620 score, but as your credit score goes down your rate goes up. So it is to your benefit to have your credit cleared up and as high of a score as possible.
- Assets – You will need to have funds in the bank for your down payment and to show you have 2 months of savings. Make sure you are depositing all earnings and keeping good records of your bank statements.
- Collateral – The property you are borrowing against (your current home or your new property) needs to be in good shape and not have any “safety or soundness” issues. Make sure there are no broken windows, plumbing leaks, lead based paint, etc.
Neighborhood Spotlight – Auraria
For more information contact Lorena Tankersley at Your Castle Real Estate,LLC at Lorena@yourcastle.org or call 303-981-6539. If you want information specific to your neighborhood, please let me know. http:/Lorena.Yourcastle.org
