September housing numbers shed light on how the market is starting to see a relief from high appreciation levels brought on by lack of inventory. Supply verses demand has rewarded the homeowner while creating a barrier to entry for buyers. Recent changes highlight the continued opportunity for both sellers and buyers… let’s take a closer look at the factors that alleviate fear and highlight opportunity.
In its 5th straight month inventory is coming back after years of hiding. Inventory is up 7.04% over August and 16.10% year-over-year. This, following August’s month-over-month gain of 7.65%. Seller’s had been spoiled by double-digit appreciation giving them unprecedented equity growth and wealth accumulation. With this overdue inventory, we are seeing more normalized appreciation as we drop from 8.04% to 6.53% year-over-year. (Remember 3.6% is normal appreciation.) Additionally, 29.6% of Coloradoans are Equity Rich, meaning they have more than 50% equity in their homes. 98.3% have positive equity, making this an incredible time to sell in order to consolidate debt and move into a dream home. Sellers, who price their home right, are still selling quickly with days on the market of 26 days compared to 3 months in a balanced market.
New listings were down from August but up over last year; so while new sellers are showing up, it is the buyers who are driving this market’s direction. The relief of more inventory has buyers reconsidering, realizing that with choices and price relief, they need to act now before interest rates go up. Mortgage purchase applications are up 4% and NAR’s foot traffic is up just under 1% (.9%). Both are strong future indicators of under contract and sold homes. What we are seeing now are buyers who no longer have to over-bid or make rash decisions to get the home of their dreams.
The average 30-year mortgage increased to the highest in 7 years to 4.97% from 4.88% in the US, almost 1% higher than this time last year. As interest rates begin their hike back up to a more normalized range (6-8%), buyers who act now
will take advantage of a lower purchase price and a lower rate, saving them hundreds in mortgage payments.
Right now we have an incredible opportunity to building wealth through real estate.
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