The Cost of Waiting

It’s true, certain parts of our market are cooling off. We are seeing fewer multiple offers, fewer bidding wars, and fewer inspection concessions.
However, homes that are priced right and in great condition are selling, and in many cases, selling quickly.

As buyers feel the market cool a bit, it may cause them to want to wait. They sometimes feel like it’s a better choice to ‘wait and see what happens.’

The reality is, there is a real cost to waiting given two specific facts.

1. Interest rates will continue to rise
2. Prices will continue to rise

Interest rates are a little more than 0.5% higher than a year ago and experts predict them to be another 0.5% higher by this time next year.

Prices have been appreciating at roughly 10% per year for the last four years. Based on the numbers, we see that appreciation could be 5% per year for the next two years.

So, let’s look at a house priced at $450,000 today. If prices go up “only” 5% for the next 12 months, that home will cost $22,500 more in a year.

And, if rates go up another half percent, the monthly payment will be $206 higher. That’s an 11% increase!

In an environment of rising prices and rising rates, there is a real cost to “wait and see.”

Posted on September 10, 2018 at 11:30 pm
Kyle Basnar | Category: Fort Collins Real Estate, Northern Colorado Real estate, Northern Colorado Realtor | Tagged , , , , , ,

Rate Recap

Rate Recap

The Federal Reserve raised interest rates by 0.25% this week. It was their 3rd rate increase this year.

This has us thinking about mortgage rates.

Today, 30-year mortgage rates are 3.93%.

Let’s put this in context with a little history lesson. Mortgage rates were…

  • 3.90% 6 months ago
  • 4.13% 1 year ago
  • 3.54% 18 months ago
  • 3.32% 5 years ago
  • 5.96% 10 years ago
  • 7.15% 20 years ago

So where are rates headed? Given that the Federal Reserve is expected to raise their rate three to four more times in 2018, we expect mortgage rates to be higher one year from today.

The Mortgage Bankers Association predicts rates to be 4.8% in the 4th quarter of next year. Freddie Mac’s prediction is 4.4%. If these predictions are true, that would mean mortgage rates would be back to where there were 6 to 7 years ago.

Posted on December 19, 2017 at 5:17 pm
Kyle Basnar | Category: Fort Collins Real Estate, Northern Colorado Real estate, Northern Colorado Realtor | Tagged , , , , , ,

Memory Lane

Today we will take a fun trip down memory lane.

Did you know that it was the fall of 1981 when mortgage interest rates hit their all time peak? Yes, it was this time 36 years ago when 30-year mortgage rates hit 18.39%.

1980's Roller DiscoYikes!

It’s important to note that in those days, not many home buyers were opting for a 30-fixed loan because rates were so high. There were a lot of people looking at adjustable rate products as a way to reduce the monthly payment.

Just for fun, let’s look at what a monthly payment would look like if those same rates from 1981 existed today.

If rates were 18.39% today, a $350,000 home with a 20% down payment would have a monthly principal and interest payment of…

$4,309! Yikes!

Thank goodness rates aren’t that high today. They are actually about 15% lower!

Today’s 30-year rate sits at 3.83% (which by the way is roughly half of the long term average).

A monthly principal and interest payment on a $350,000 home with 20% down is…

$1,309. Three thousand dollars lower than it would be using 1981 ‘s rates.

 

For a detailed look at what’s happening across Colorado, request our quarterly market report called “The Gardner Report“, written by Windermere Real Estate’s Chief Economist, Matthew Gardner.

Posted on October 2, 2017 at 8:21 pm
Kyle Basnar | Category: Blog, Fort Collins Real Estate, Loveland Real Estate, Northern Colorado Real estate, Northern Colorado Realtor, Wellington Real Estate, Windsor Real Estate | Tagged , , , , ,

Our Crystal Ball

Last week Windermere’s Chief Economist Matthew Gardner joined us for our annual Market Forecast events in Colorado. We were pleased to host over 500 customers at two events in Denver and Fort Collins.

Here are some of the big takeaways that we shared:

  • Interest rates will increase to 4.6% by the end of the year
  • First-time buyers are back and will make up 47% of all buyers in 2017
  • Inventory will remain at record lows and will continue to drive up prices
  • Appreciation is expected to be between 9% and 7% accross our Front Range markets
  • Home builders will get creative in order to hit lower price points – we will see more “tiny homes” and more homes without basements

Click HERE to see Matthew Gardner’s infographic on the 2017 Forecast.

Posted on February 2, 2017 at 9:37 pm
Kyle Basnar | Category: Blog, Fort Collins Real Estate, Friday Fun Facts | Tagged , , , , , , , , , , , , , , , , , , , , , ,