Price Plummet
For anyone waiting for home prices to drop before making a buying decision, there is good news.
The recent plummet in mortgage rates means that home prices, effectively, just took a big dip.
Rates have gone down by 1% in the last 45 days which means that a prospective home buyer’s payment is 10% less today than what it would have been at the end of October.
For example, the Principal and Interest payment for a $500,000 loan is $341 less today than what it was 45 days ago.
So, from a buyer’s perspective, prices have gone down by 10% in a very short time.
The Price is Right
This is an interesting and important time of year for current home sellers.
Thanksgiving is approximately 45 days away which is an important deadline for home buyers.
Many buyers who are considering a move this time of year would like to close on a home before Thanksgiving.
Current home sellers have a one to two week window to have their property under contract so a buyer can close by the Thanksgiving deadline.
Activity always slows in the winter and typically doesn’t show a noticeable increase until March.
So, proper pricing is paramount today so that sellers can take advantage of the seasonal window which is closing soon.
New Construction: Why Work with a Buyer’s Agent?
- Negotiate on your behalf
- Clarify what is included in the base price
- Help you navigate the purchase amidst rising building costs
- Help you obtain the best financing available
- Provide guidance with regard to builder’s warranties and home inspections
Traditionally, sellers are responsible for paying real estate agent fees. In the case of new construction homes, the builder will likely cover all or most of the agent’s commission. You may be able to work with a real estate professional at no cost to you.
For additional inquiries, please contact our office or your Windermere real estate agent directly.
Money at a Discount
This week, for the first time in 32 months, mortgage rates hit 4%.
While this increase may feel painful for buyers currently looking at property, it is important to put today’s rates in perspective.
We believe we will look back a few years from now and see that a 4% rate was like buying money at a discount.
Interest rates hovered between 4.5% and 3.75% for the 8-year span of June, 2011 to June 2018
Between January, 2000 and December, 2010 rates were as high as 8.25% and as low as 5.0%.
When looking at the history of interest rates and researching economists’ forecasts, we believe it is reasonable for rates to hit 5% within the next 24 months.
When interest rates increase 1%, a buyer’s monthly payment increases 10%.
So, if rates do go to 5%, it is like an additional 10% price increase for a buyer.
Given all of this information, we believe the biggest risk to a buyer in today’s market is to wait.
Mortgage rates are likely on their way up and there is an opportunity to buy money at a discount today.
Must-Haves and Nice-To-Haves Lists
Finding your dream home may not be easy, but there are things you can do to make it easier, like creating a “Must-Haves” list and a “Nice-To-Haves” list. These lists allow serious home buyers to save time, energy, and ultimately, money as they prepare to buy a home.
A Must-Have List is exactly what it sounds like, a checklist of the details that are non-negotiable for your new home. It’s essential to sit down and think about the things you need in order to feel comfortable there for the next 7-13 years.
Your “Nice-To-Haves” list is a checklist of details that you’d like to have, but you can live without. This list is great for those things that you’ve always dreamed of but may be out of reach for reasons such as your budget or location. This list may include things like fireplaces or gas appliances, a pool, or other non-essential items.
Your “Must-Haves” list focuses your search and helps your agent narrow down which homes are worth your time. Your “Nice-to-Haves” list will help you determine what you’re willing to sacrifice, which will ultimately solidify your must-haves.
These lists can also help manage your expectations regarding price. Take your lists to your real estate agent, along with your pre-approval from a lender, and you’ll be able to work together to determine what is a reasonable ask within your budget and your desired location.
Creating Your “Must-Haves” List
The first step is to think about the essentials. If things like location and number of bedrooms and bathrooms are a priority, then you’ll want to include them in your must-haves. Consider where you live now and use that as a starting point; what do you love and what are you missing? You may need more storage space, or an extra room to work remote, or a larger backyard for the newest member of the family.
Here are some questions to ask yourself as you build your “Must-Haves” list:
- Where do you want to live? (Be as specific as you can.)
- What do you have now that you can’t live without?
- What are you missing now that you may need for the next several years?
If you’re struggling to determine what it is you need to have, you can start working on your “Nice-To-Haves” list. This can also help you determine what is essential. For example, it may be nice to have five bedrooms when in reality, a three-bedroom house with a flex space that works for an office or guest room would do the trick.
Creating your “Nice-To-Haves” List
While you’re working on your “Nice-To-Haves” list, you’ll be thinking about the parts of a home that would be great to have but aren’t as important for you. You might also want to take into consideration what is reasonable in your area and if it’s a common amenity.
Here are some questions to ask yourself as you build your “Nice-To-Haves” list:
- What home upgrades are you willing to make?
- What is something you’d like to do in your house more often?
- What do you have in your current home that you love, but don’t need?
Searching for Your Next Home
These lists will help guide you and your real estate agent as you search for your next home. During this process you might realize some aspects aren’t as important to you as you thought, and vice versa. Keep your agent in the loop as you update your lists so they can continue to search for the perfect home for you.
Looking for a real estate agent who can help guide you through the home buying process? Connect with an Agent:
Seller Facts
Here are some fun facts about recent home sellers. This research comes from the National Association of Realtors survey of home buyers and sellers:
- 10 years = the average time recent home sellers have lived in their home. This number has remained essentially unchanged for the last ten years. From 1987 to 2007 the average was 6 years.
- 89% = the percentage of home sellers who use a Realtor to help sell their home. This has been trending higher over the last 20 years. In 2001, 79% of home sellers used a Realtor. As the transaction gets more and more complex, more sellers seek the help of a Realtor.
- 75% = the percentage of home sellers who found their Realtor through a personal relationship as opposed to seeking out an agent they didn’t know.
- 77% = the percentage of home sellers who only interviewed one Realtor for the job of selling their home.
No Inventory?
One misconception about today’s market is that there is ‘no inventory.’
Actually, there are numerous new listings that hit the market each month. It just so happens that they tend to sell quickly.
The numbers show the number of new listings that came on the market in September closely equate to the number of sales that occurred.
- In Larimer County, 693 new residential listings hit the market last month and there were 688 sales.
- In Weld County, there were 681 new listings and 733 sales.
- In Metro Denver, there were 6125 new listings and 5233 sales.
So, while homes tend to sell quickly today, there is still a significant amount of new inventory hitting the market each month for buyers to consider.
Lower Lumber
Lumber prices are becoming more normal again.
After soaring this Spring to record levels, they have lowered back to near pre-pandemic levels.
The current price for 1000 board feet of lumber is $577. This is 62% below the price this past May when it reached an all-time high of $1,515.
In the years leading up to the pandemic, prices tended to be between $350 and $500.
While this is great news for consumers and home builders, the prices aren’t drastically lower yet in the lumber aisle at your local bib-box hardware store.
This is because many retailers are still selling through their inventory of lumber which they purchased at higher prices.
However, for the long term, home buyers will benefit from the more normal lumber prices that now exist in the market.