Welcome to the February edition of the 2014 Denver Real Estate Market Newsletter.
Buyers Lose Purchase Power As Interest Rates Rise
Interest rates are expected to rise in 2014. The United States Federal Reserve Bank (U.S. FED) has been artificially stimulating the economy by purchasing Treasury bonds and mortgage-back securities to lower long term interest rates. As the U.S. FED begins to ‘taper’, or phase out the stimulus program, interest rates will increase.
Here are the projected interest rates for this time next year (current 30 year fixed rates are at 4.5%):
What’s remarkable is the effect of increasing interest rates and the resulting decrease in buyer purchase power. An interest rate increase of 1.0% will result in a 10% loss of purchase power. As the chart below demonstrates, if you were comfortable with a $2,000 monthly mortgage payment (principal and interest only), then you would be able to afford a $400,000 mortgage. If rates increase by 1 point to 5.5%, keeping the same $2,000/month payment, then the mortgage amount you could now afford would drop to $360,000. That’s a 10% loss in purchase power. The question I would ask is, why would you wait to buy a home and lose 10% of your purchase power?
WHEN IS THE BEST TIME TO SELL YOUR HOME?
The absolute best time to sell a home is when the inventory of homes for sale is at its lowest and buyer demand is at its highest.
- What happens during this time? Homes sell quicker and for a higher price.
- Why do homes sell quicker? That’s simple, the principle of supply and demand. There are so few homes currently for sale that buyers are sitting on the sidelines waiting for new listings to come onto the market. Homes that are priced at market and show well are selling in a matter of days.
- Why do homes sell at a higher price? Again, the principle of supply and demand. Buyers don’t have the option of walking down the street to find a similar home for sale. When buyers are purchasing in a seller’s market, they are inclined to offer closer to the seller’s asking price or risk losing the house to another buyer
We are now in a seller’s market. In my neighborhood of 420 homes there are only 2 for sale (both of which are overpriced). If you are considering selling your home, now is the time to put it on the market. Call me today to discuss your options to sell your home quickly and for the highest price possible.
FACEBOOK AND PAUL’S MOBILE REAL ESTATE APP
Please ‘Like’ my Facebook business page. Use this link to be redirected to ‘Paul Sobania – Real Estate’ and click on the ‘Like’ button (log in to Facebook.com if needed).
Search homes for sale on your smart phone or tablet using my home search app. Log in to the iTunes Store or Google Play and download the Keller Williams app. When prompted, type in the code ‘KWKB85L’. For simple downloading instructions use this link, www.PaulMobileApp.com.
REAL ESTATE NEWS
2014 home sales off to a strong start Read More
Low inventory drives up Denver luxury home prices Read More
U.S. existing-home sales top 5 million in 2013, best year since 2006 Read More
Denver homebuilder, Richmond American Homes, posts two straight years of profit Read More
COMMERCIAL REAL ESTATE NEWS
Denver is a top ‘market to watch’ for commercial real estate Read More
Despite vacancy increase, metro Denver apartment rents rise Read More
2013 foreclosure sales at 10 year low Read More
Colorado unemployment rate drops 6.2%, lowest in 6-years Read More
Metro Denver unemployment rate unchanged at 5.8% Read More
More Charles Schwab jobs coming to Colorado Read More
Colorado new car sales hit 5-year high Read More
USS Denver to be decommissioned Read More
Denver is among nation’s most literate cities Read More
Centennial Gun Club opens shooting range Read More
Winter X Games to stay in Colorado through 2019 Read More
THANK YOU FOR YOUR BUSINESS AND REFERRALS!
If you or someone you know is thinking about buying or selling a home any time in the next year, please call to let me know. It would be my pleasure to work with you or your referral. My commitment to my clients is to treat them with the utmost care as they work towards buying or selling a home. Referrals are the core of my business and are always appreciated.
Free Real Estate Tools
When searching for homes for sale anywhere in the Denver metro area use this link, Interactive Map-Based Home Search. This interactive, map-based home search tool makes looking for homes fun and easy. If you are interested in a specific neighborhood, whether it is your current neighborhood or the one that you hope to move to someday, this site can send you e-mail notifications when new homes come onto the market. Happy home searching!
Please call me with your real estate questions. I’m always happy to help you navigate through this constantly changing real estate market!