December 2024 Housing Trends - Buyers Have the Upper Hand.
Denver Market Trends | November 2020
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No Rest for the Weary
November’s DMAR report highlighting October data reflects just how important the home has become by producing nearly as many records as we saw in last month’s report. Most notably is what is happening in the attached single-family category.
Looking to purchase your first home? Move into that perfect dream house? The market momentum is making it harder, and the broader economics will not make it any easier. Let’s start with DMAR specific numbers, then jump into how the broader economics might keep the Denver trend from waning.
For those looking to sell their detached single-family home, there has never been a better time than now! For those looking to buy, be ready to go all in. This is not the time to low ball or sleep on it. If you find a house and it’s the one, make your best offer quickly because next month it will cost more. Here are the most impactful highlights:
- Average and Median Close Prices hit their highest ever at $625,100 and $519,900, up 18.04 percent and 14.26 percent respectively from last year.
- Days on Market sped up to six days.
- Months of Inventory dropped to an all-time low of .61.
- Sellers are getting on average 100.33 percent of their list price; and
- We started this month with 3,041 homes for sale. 4,224 sellers put their house on the market, buyers put 4,337 under contract and closed on another 4,352, leaving a measly 2,643 for November.
Bottom line: Sellers, your homes are in HIGH demand, and you will get top dollar for them. Buyers, get aggressive for the one you love; with these low interest rates and continued appreciation, you will not lose.
If you are in the attached market, the odds of your offer being selected are a little better. Ready to make an offer? As a buyer, you are paying 99.76 percent of the list price; have 1.33 months of inventory and nine days to make a decision. Prices are also going up slower than detached with average prices up 7.86 percent, and median price up 9.85 percent. First time home buyers, this is your opportunity. Long term, this purchase could be an incredible first investment.
Economics
What’s going on beyond the housing market to sustain this momentum?
COVID-19 cases are spiking worldwide. London was the latest to activate a four-week shutdown of all non-essential businesses. Ireland, Germany, Austria, Italy, Greece, among others, are announcing new measures to try to slow down the spread. This uncertainty will result in an even greater importance of home and keep long-term mortgage rates low for the foreseeable future.
The Federal Reserve started buying 1.5 percent Mortgage-Backed Securities Coupons. These coupons have been trading for some time, but now the Fed is putting their money behind it. As the largest liquidity source for new MBS originations, where the Fed puts their money the market goes. This does not mean we will see rates as low as 1.5 percent, but it does allow for lenders to generate profitability at lower, long term rates. So again, paving the way to sustainable lower rates.
The economy continues to show its resilience. Third quarter 2020 GDP came out exactly where it was expected at 7.4 percent or 33.1 percent annualized. This recovered two-thirds of second quarter GDP loss. Inflation was also muted up only .2 percent month over month, incomes rose .9 percent month over month, and the personal savings rates were up 14.8 percent for the third quarter. This will provide strength as the second wave of shut downs begin to take place.
Forbearances ticked up, but extended regulations protect those who opted. As of October 27th, new forbearance activations went down 7 percent month-over-month; while re-activations were up 50 percent, bringing all forbearances up 15 percent. The majority of increased forebearance was in the FHA/VA category because Ginnie Mae extended the activation period from October to the end of the year. Homeowners can now protect their homes through 2021, putting off foreclosures and any chance of the depreciation that plagued 2008.
Bottom Line
Home prices will continue to rise.
Hopefully, not this fast for long, but they will keep going up. Why? Because demographics and low interest rates will continue to spike demand. Mortgage Interest Rates ended October at 2.81 percent with mortgage purchase applications continuing a six-month double-digit growth. 2020 will end with record volumes in sales and mortgage originations.
Now is not the time to sit on the sidelines in fear that the bubble will burst; it is the time to stay engaged. Finding the right home might be challenging, but waiting will only cost you more.
Your champion in building wealth through real estate,
Nicole Rueth
Producing Branch Manager with The Rueth Team of Fairway Mortgage
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