Monthly Mortgage Market Trends

November 2018

November Mortgage Trends Insight


Producing Branch Manager

Inventory, Interest rates and appreciation are the real estate hot topics this month. As a member of DMARs Market Trends Committee, I want to highlight some of the data I am seeing and how it can help you lean into your buyers and sellers. Right now buyers and sellers are operating out of fear. They are hearing that the market is softening, that interest rates are going up, that demand is down. They are immobilized in a time when they should be taking action. Right now continues to be an incredible time to both buy and sell.

Let’s look at some of the data. What we are seeing this October is a track back to normal seasonality. This is a welcome change. After years of a lack of inventory and artificially held low interest rates, most first time homebuyers were kept out of the market due to the lack of homes and being out bid. Now inventory is up from bottoming out in December at 3854 homes for sale (attached and detached). Supply and demand play a critical role in the health of the market.  December’s all time inventory low stressed the Denver market and was unsustainable. Since then we have seen inventory come back up to 8539 homes for sale in October. This is a 35% year over year gain and a more than doubling since December.  

Another great sign is Under Contracts is up over 5% showing buyer interest. Demand can also be measured by mortgage purchase applications remaining par year over year in a rising interest rate market. Rates ticked in at .93% higher than a year ago stressing affordability and all experts agree, rates are going up. The amount is still in question with some quoting 5.2% next year and others 5.5% in 2019 and as high as 6.5% in 2020. But let’s put this in perspective compared to the historical average 30 year fixed mortgage interest rate of 8.16%*. So today’s rate of 4.83% still provides buyers a phenomenal opportunity.  Also worth noting, as interest rates rise, a median priced home only goes up $25 for each 1/8th in rate.  

Lastly, let’s look at appreciation, year to date appreciation is strong at 8.47% primarily due to the 1st Quarter number. October saw a seasonal drop in appreciation coming in at 5.26%. A homeowner continues to gain incredible wealth with the ability to leverage. Consider a 5% appreciation on a home worth $400,000 when you only need to put 3-5% down? Real estate gives you an incredible path to build wealth.. even at more normalized appreciation levels. Let us remember… a normal appreciation is 3.6%.

*since they were tracked in 1972

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