Sunday, January 11, 2009

The Metro Denver residential real estate market appears to be fairing better than most other major markets across the country.  Depending on the source for market data, the overall Denver market has experienced fairly stable market values or a 5-13% decline, over the last year.  That is fairly good compared to other parts of the country that have experienced up to 30% depreciation, in the last year.  The Denver market remains very diverse, some areas are doing well while other areas are struggling.  The best news remains to be mortgage rates, currently around 5.0% for a 30 year fixed rate.  With low interests rates and great prices on housing, it is an excellent time to be buying.

Contact me for more information on the real estate market.  You can also read a recent article from the Rocky Mountain News, on this subject.

Very encouraging news for residential real estate in the Denver Metro area.  The number of unsold homes in the metro area has decreased approximately 21%, with 23,932 homes for sale in September 2008 compared to 30,335 homes in September 2007.  Additionally, the number of homes under contract increased from 4,329, in September 2007, to 5,269, in September 2008.  Ironically, that is a 21% increase in homes under contract from last year.  With lower inventory and an increasing number of homes under contract, the Denver real estate market may be seeing the beginning of a transition from a “buyer’s market.”  The current absorption rate is less than 6 months, which further supports improving market conditions.  The Metro Denver residential real estate is very complex with market pressure still existing from distressed sellers, foreclosures and short sales.  Contact me with your specific real estate market questions.

Source:  Denver MetroList and Rocky Mountain News.

Good news for borrowers!  From an article in Friday’s Rocky Mountain News, Fannie Mae announced that it will drop its policy of requiring higher down payments in specific zip codes where real estate markets have been declining.  If a borrower was buying a home where Fannie Mae had determined market values were declining, Fannie Mae was requiring at least a 10% down payment.  The change in policy should help ease credit concerns and open more opportunities for home buyers.   The National Association of Realtors, NAR, had lobbied hard with Fannie Mae and Freddie Mac officials to change its declining market policy.  NAR position was the declining market policy was stigmatizing zip codes and properties worst hit by foreclosures, greatly hindering the reinvestment in struggling real estate markets.

An interesting article in today’s Denver Post concerning Colorado’s per-capita personal income for 2007.  Frankly, I was (or wasn’t) surprised by the negative headline:  “Colorado income gains among the slowest.”  The headline sounds concerning, but as I read on the over all picture concerning per-capita personal income growth in Colorado is actually pretty good.  Information from the U.S. Bureau of Economic Analysis, Colorado still ranks in the top 10 nationally for per-capita personal income.  According to local economist, Patricia Silverstein, the slow income growth is largely attributed to the increase in population growth.  “We had reasonable job growth. Part of the reason for our low ranking was faster population growth,” said Patricia Silverstein, an economist with Development Research Partners in Littleton.

According to the Metro Denver Multifamily Vacancy and Rent Survey, the metro Denver vacancy rate rose slightly in the fourth quarter of 2007, to 6.1 percent.  The increase is considered minor and relatively optimistic when compared to the fourth quarter of 2006 vacancy rate of 7.0 percent.  Average rents remained fairly stable from the third to fourth quarters, of 2007, with a small increase of $2.00, in the fourth quarter.  New construction of apartment homes, in 2007, has been relatively stable, with 2,262 new units built in 2007.   Overall, the rental market appears to good with adequate supply and demand.  You can read more about rental vacancies and rates in the Rocky Mountain News.

Tuesday, January 22nd

The Fed cut the Fed Funds Rate by .75%, lowering it to 3.50%. The Fed decided to hold a special meeting last night because US Stock futures were trading significantly lower. Stocks around the world sold off sharply yesterday and this morning, as foreign countries fear a US recession.  Treasury Secretary Hank Paulson stated this morning that he is optimistic a stimulus package plan can be implemented with Congressional approval “long before winter turns to spring.”

Tuesday’s volatility has caused Mortgage Bond prices to hit their best levels in three years, causing home loan rates to improve. I will continue to recommend floating, but we need to be prepared to lock should things change. Stocks are very volatile and any further improvement in stocks could be at the expense of Mortgage Bonds.

30 Year Fixed at 5.25% with 0.75 points or a 15 Year Fixed at 4.875% with 0.75 points.

Interest rates quoted as of 01-22-08 for Conforming Loans 

Interest rate and Mortgage Bond market information provided by:

Paul Oehm of Cherry Creek Mortgage http://www.pauloehm.com/

Credit reporting agencies will soon be using a new algorithm to better predict credit risk or worthiness of a borrower.  The new algorithm, introduced by Fair Isaacs, Inc of Minnesota, could help some consumer’s credit scores while others may drop.  The new calculation is being reported as more forgiving of a one-time negative occurrence, when balanced by a strong credit history.  You can read more about managing your credit and credit score in an article from The Denver Post.

The voters in the City of Littleton turned down the proposed zoning changes to allow for a new SuperCenter Wal-Mart to be built on South Santa Fe Drive, just north of the Aspen Grove Mall.  From an article in today’s Denver Post, votes opposing the new Wal-Mart store were 7,878, while those in favor were 5,128.  Supporters opposing the new store were concerned about the impact on the South Platte Park, just west of the proposed site.  Proponents of the new Wal-Mart cited the increase in tax revenue for the city of Littleton.  The public vote overturned Littleton’s City Council’s 4-3 vote in favor of the new SuperCenter Wal-Mart.  Wal-Mart spokesman, Josh Flair, said “We’re going to reassess and hopefully come up with a project that works for us and all of Littleton.”

“The tax man cometh…”  Hopefully, you have already filed your taxes and you’re not fighting the lines at the post office today.

Over the weekend, there was an interesting article in the Rocky Mountain News, concerning the foreclosure rate in the
Denver metro area.  Unfortunately, the foreclosure rate rose 30% in the first quarter of 2007, when compared to the first quarter of 2006.  While analysts were hoping for a much lower increase of foreclosures in the metro area, it is becoming apparent that factors contributing to the high foreclosure rate will continue into the near future.  Aggressive lending practices, 100% financing, modest to sometimes negative market appreciation are among the many causes contributing to the record high foreclosures in the Denver metro area.  Contact me if you have questions about your market area and how foreclosures may or may not be affecting your local market.