Monthly Mortgage Market Trends

January 2020

January Mortgage Trends Insight
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NICOLE RUETH

Producing Branch Manager

“It’s tough to make predictions, especially about the future.”  Yogi Berra

Lawrence yun quoted at the end of 2018 “the housing market in 2019 after a period of uncertain direction and swings will turn out to be quite boring”. I have to admit that I liked that quote and where we were headed. We had just escaped spiking interest rates and disappearing buyers to a warm welcome of rising inventory.  

As it turns out, this year was anything but boring, especially on our economic front.

The Recession Watch drew headlines for most of the year as we watched the yield curve invert, manufacturing decline and spikes in jobless claims. China trade talks also dominated headlines moving the stock market and consumer confidence. Despite the political and economic unrest, consumers kept spending, wage growth hovered at 3%, job growth slowed but unemployment stayed at record lows.  

Have you wondered why the threat of recession got pushed out even though manufacturing and shipments are in a recession and business spending is down? Remember, a recession is defined as 2 consecutive quarters of GDP decline and 70% of the GDP is consumer spending. Joe and Jane America’s incessant want for more should keep us away from a recession for a bit longer. Plus, we have a partner in the fight, the Federal Reserve Board, as they continue to buy $100M in short term Treasure Bills a month keeping the market artificially inflated. 

Last month I talked specifically about the psyche of the seller. Where have they gone, why were they waiting and where did all the inventory go.  

This month the pain is real. Inventory dropped increasingly lower, down 27.92 percent month over month and 9.68 percent year over year. Active listings finished the year with only 5,037 homes for sale. Only 4 years, 2014-2017, in the last 20 had lower listings than 2019. Inventory is down across every price point, yet seller concessions were up in December. Wait what? Yep… 44.6 percent of sellers in December reduced their asking price prior to receiving an offer, this is up from 40 percent.  Listings that had a price reduction spent an average of 70 days on the market, up from 59. Those who didn’t have a price reduction? Their homes sold in an average of 15 days. It’s still a sellers’ market but buyers don’t care. Sellers want to keep getting the returns their neighbors got and buyers are unwilling to pay the piper any longer. Sellers… price your homes based on TODAY’s market, not yesterday’s windfall!

New Listings were up 3.98 percent from 2018; but so were solds, up 3.43 percent. High demand dropped months of inventory at year end to a measly 1.13.  

Those homes over $1,000,000 have 4 months of inventory while the homes between $200,000 and $499,000 are unable to keep up with less than 1 month of inventory. Nationwide we are seeing strong demand at or below the median purchase price. Denver is no exception. Flattened appreciation and the low interest rates that defined 2019 gave home buyers some breathing room as affordability hit a 20 year high. Additionally, the highest number of millennials turn 30, their older siblings are starting to have kids and move to the suburbs and mom and dad boomer who own 41% of the homes are trying to downsize. Mortgage purchase applications were up 5% year over year ending December as rates continued to hover about 1 point lower than this time last year. Rates landed the year at 3.72 percent (with .7 discount)   
Last time inventory was this low with strong demand, buyers were writing contracts inside listings and 20 offers was normal.  This time around there might be multiple offers but buyers aren’t buying just anything. They want move in ready, smaller homes with more amenities. 

Before we go, let’s take a quick journey down memory lane. The average home price 10 years ago was $259,117, compared to $484,812 today. We ended 2019 up 2.85 percent and the decade up 87.8 percent. I read that the S&P gained 185% in the last 10 years. Did housing stack up? You bet! Here in lays the wisdom of leverage. If I had put $100,000 in the stock market 10 yrs ago, today I could leave the market with $285,000. If I bought a $500,000 home with 20% down, I gained $439,000 in appreciation for the same $100,000 invested. Have you heard of CNN’s Fear-Greed Scale? The stock market is poised to retreat in 2020. So where would you rather have your money?

There is a lot of useful data in this month’s Market Trend Report, more than I can cover in this short video. It can be overwhelming and hard to determine what can be translated with your clients. If you want help unpacking this information to become the trusted real estate advisor for your clients, then join us at our monthly Agent Ignite class or DMARs Warning: Graphic Images.  

Cheers to 2020! May we be smarter still.

Your champion in Building Wealth through Real Estate,

Nicole Rueth

The Rueth Team of Fairway Mortgage

 

 

 

Why The Rueth Team?

The Rueth Team is dedicated to our clients success. It is this driving mission that keeps our team constantly learning and pushing beyond our boundaries. We find the solutions other lenders simply can’t (or won’t). We make a commitment to each borrower, fulfilling it with hard work, constant communication and creative problem solving. When a referral partner gives our name, they are confident knowing they are giving their clients the best chance of a smooth, successful experience.

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Contact Info

303-214-6393
nrueth@fairwaymc.com   750 W Hampden Ave Suite 500 Englewood, Colorado 80110, United States

 

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