Denver Real Estate Blog

Mortgage Rates lowest in 4 years

Mortgage rates followed other interest rates lower this week, with the average 30 year fixed rate mortgage now at the lowest level in almost four years. Freddie Mac’s weekly report says 30-year fixed rate mortgages averaged 5.48 percent this week, down from 5.69 percent last week. It is the fourth consecutive week mortgage rates have declined

A separate report Thursday from the National Association of Realtors said housing prices and housing sales continued to decline. Sales of existing homes in December fell 2.2 percent. In all of 2007, sales fell 13 percent. Existing single-family home prices in 2007 fell 1.8 percent, the first annual decline in four decades.

Commercial real estate success in 2008 will be tied to three key factors: the supply and pricing of credit, the single-family housing market and energy prices. The report issued by PMI Mortgage Insurance Co of Walnut Creek, Ca indicates based on third-quarter data on mortgages, foreclosures, home prices, labor market statistics and offers metro areas a scale of one to 100. The scale translates to a percentage; a score of 50 indicates a 50 percent chance home prices will be lower in two years.

Positive News for Denver Metro Area.

The score for the Denver-Aurora MSA — which covers 10 counties including Denver, Jefferson, Adams, Arapahoe, Broomfield and Douglas — is one.

The same score is shared by the Cleveland area. Other metro areas, such as San Antonio, Pittsburgh and Dallas, were given a score of less than one.A look across the country, The risk of home prices falling in two years is highest in California and Florida as well as in Las Vegas and Phoenix. The Riverside area of California had the highest risk score, at 94 percent, while the score for Las Vegas was 89 percent. Las Vegas, 89 percent; and Phoenix 83 percent.

Why is this happening?

The credit crunch that followed last year’s subprime lending crisis is partially responsible for declining sales and prices. Many would-be buyers are waiting for prices to drop further and owners who can delay their sales are doing so.

Over the past year, nationally home sales have dropped by 22 percent, single-family housing starts have plummeted by almost 35 percent, and nationwide, home values have slipped by about 4.5 percent. Clearly it has been far from a normal year in the housing market, and 2006 was weak as well. On the other hand, the several years before these were just as unusual for housing, but from the opposite perspective. So, just what is a normal year for housing, and will we ever see one again?

Historically, the housing sector has been one of the most volatile in the U.S. economy. The reason for this is that to a large extent home sales are driven from year to year by housing affordability, which in turn usually is affected most strongly by movements in interest rates. Whether it is because of changes in monetary policy at the Federal Reserve, adjustments in inflation expectations, movements in foreign capital flows, or just increases or decreases in economic growth, interest rates tend to be volatile—thus moving housing demand up or down, often sharply. In recent years this more normal interest rate volatility has been heightened by movements in house prices, resulting in sharp swings in affordability.

Over longer periods of time, other elements—most notably demographics—tend to have a stabilizing influence on housing demand. But even in a several-year period of time, the cyclical factors affecting housing demand can overwhelm the calming impacts of demographics.

This is exactly what we’ve seen over the past five years in the housing market, with strong activity from 2002–2005, and weak activity since then. A combination of high levels of affordability,low borrowing costs, less stringent underwriting characteristics, and a surge in investor demand for houses boosted housing demand and home price gains in that earlier four-year period. More recently, slower job growth, a sharp drop in affordability, tighter underwriting standards, and a wholesale movement by investors into other markets has led to the drop in housing activity over the past two years.

Historical Housing Statistics for Colorado

Real Estate Experience Should Not Be Defined by Years in the Business

Resource

A Colorado Rental Property Resource for both landlords and tenants can be found at http://www.coloradorentalproperty.net . Online land lords can post detailed information regarding their rental property, including 5 color photos. The ad can be self directed by the landlord to their cell phone or property management company. This is a service provided FREE by RealEstateColorado.Net and the ad will remain on line until it is asked to be removed.

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Jeffery McClintock, is a real estate broker in Denver and prides himself on providing clients with professional guidance in all phases of residential new construction, including market research, product development, consulting, marketing and advertising. His personal mission is to bring to you a level of knowledge, experience, commitment, high standards and results to answer your real estate needs. He believes, the most effective way to provide superior service is to build a strong working relationship with you. His system includes regular consultations and feedback, which is the best tool for identifying and clarifying your real estate objectives and help define strategic solutions.

Jeffery has been a licensed Realtor since 1995. During this time he has successfully closed over 135 million dollars of residential real estate, and 40 million dollars in un-improved land amounting to 660 individual real estate transactions. His professional experience includes the Denver Colorado front range and the Second Home market in Breckenridge, Colorado located in Summit County.