Denver Colorado Housing Market Report for November 2014

Denver Lifestyle速 Real Estate Market Update NOVEMBER 2014

www.DenverRealEstateOffice.com

-Home sales -Pending home sales - Foot traffic - Mortage rate predicitons - The effect of interest rates on the housing market - and more‌

www.DenverRealEstateOffice.com

EXISTING Home Sales Started slow, but continuing to climb, which, for this time of year, is NEWS!

www.DenverRealEstateOffice.com

PENDING Home Sales Pending home sales numbers are rising.

Buyers at this time of year are serious‌ they are not window shoppers.

www.DenverRealEstateOffice.com

Foot Traffic (indicator of future sales)

www.DenverRealEstateOffice.com

These numbers are skyrocketing up, when they would normally start to drop at this time of year.

Pending Home Sales Note – September is INCREASING this year… momentum is still here.

www.DenverRealEstateOffice.com

NAR 10/2014

Foot Traffic (indicator of future sales) Foot traffic is way up from last year in the months of July, August and September. The %age we are up over last year is WAY up – look at September!

www.DenverRealEstateOffice.com

Mortgage Credit Availability The higher this number is, the more available money is‌ the availability of credit is easier and easier since April 2013.

www.DenverRealEstateOffice.com

Average FICO Score Conv Purchase Loans As this number comes down, the availability of money is going up, while not at the 640s of the go-go years that crashed the market.

www.DenverRealEstateOffice.com

EllieMae

Average FICO Score FHA Purchase Loans However, for FHA loans, we are down into the 600s. This brings more and more buyers in to the market.

www.DenverRealEstateOffice.com

EllieMae

“To increase access for creditworthy but lower-wealth borrowers, FHFA is also working with the Enterprises to develop sensible and responsible guidelines for mortgages with loan-to-value ratios between 95 and 97%.”

Mel Watt Director of FHFA SAID THISJUST LAST MONTH!! www.DenverRealEstateOffice.com

30 Year Fixed Rate Mortgages Still a record low for interest rates… they are going up, see next slide.

Freddie Mac Actual Rates January 2013 – October 2014

www.DenverRealEstateOffice.com

Freddie Mac 10/2014

Mortgage Rate Projections Projected Rate 2015 4Q

Analyst Fannie Mae Freddie Mac

These projections were made in the last 30 days‌ up to a point higher than current rates.

4.7% 5.1%

Mortgage Bankers Assoc

5.1%

National Assoc of Realtors

5.4%

www.DenverRealEstateOffice.com

Three-quarters of all respondents believe interest rates will rise in the near future. www.DenverRealEstateOffice.com

Edelman Berland

Percentage who said they were considering a transaction now before interest rates rise.

Motivation is increasing. 6 out of 10 people are saying rates are going up, I need to buy NOW!

www.DenverRealEstateOffice.com

Edelman Berland

30 Year Fixed Rate Mortgages As the interest rate goes up, buying power goes down.

Freddie Mac Rates January 2013 – October 2014

Freddie Mac Projected Rates June 2014 – 2015 4Q

1/2013 www.DenverRealEstateOffice.com

10/2014 Freddie Mac 10/2014

Date

Mortgage

Interest Rate*

P&I**

Today

$100,000

3.98%

$476.26

2015 4Q

$104,000

5.1%

$542.95

Difference in Monthly Payment

$66.69

Doesn’t seem like a lot… but look closer…

Monthly

Annually

Over 30 Years

$66.69

$800.28

$24,008.40

*Average Commitment Rate per Freddie Mac

**Principal and Interest Payment

Date

Mortgage

Interest Rate*

P&I**

Today

$250,000

3.98%

$1,190.66

2015 4Q

$260,000

5.1%

$1,357.37

Difference in Monthly Payment

$166.71

As the mortgage size goes up, so does the loss of wealth over time.

Monthly

Annually

Over 30 Years

$166.71

$2,000.52

$60,015.60

*Average Commitment Rate per Freddie Mac

**Principal and Interest Payment

Date

Mortgage

Interest Rate*

P&I**

Today

$500,000

3.98%

$2,381.31

2015 4Q

$520,000

5.1%

$2,714.75

Difference in Monthly Payment

$333.44

Just a 1.1% difference can cost you $120k on a $500,000 purchase. Yikes!

Monthly

Annually

Over 30 Years

$333.44

$4,001.28

$120,038.40

*Average Commitment Rate per Freddie Mac

**Principal and Interest Payment

Date

Mortgage

Interest Rate*

P&I**

Today

$1,000,000

3.98%

$4,762.63

2015 4Q

$1,040,000

5.1%

$5,429.50

Difference in Monthly Payment

$666.87

Are you ready to throw away a quarter of a million dollars?

Monthly

Annually

Over 30 Years

$666.87

$8,002.44

$240,073.20

*Average Commitment Rate per Freddie Mac

**Principal and Interest Payment

RATE

Buyer’s Purchasing Power 5.25 $

552

$

538

$

525

$

510

$

497

5.00 $

537

$

523

$

510

$

497

$

483

4.75 $

522

$

509

$

496

$

482

$

469

4.50 $

507

$

495

$

481

$

467

$

456

4.25 $

492

$

480

$

467

$

455

$

443

4.00 $

477

$

465

$

454

$

442

$

430

3.75 $

463

$

452

$

440

$

428

$

417

$ 100,000

$

97,500

$

95,000

$

92,500

$

90,000

-2.5%

-5%

-7.5%

-10%

Principal and Interest Payments

4.75% is beneath what is projected, and you are already having to buy 10% less. www.DenverRealEstateOffice.com

rounded to the nearest dollar amount. See how a difference in interest rate affects your future net worth, your monthly disposable income and the size of the house you can purchase.

As interest rates go up, the purchase price goes down to keep your payment the same.

RATE

Buyer’s Purchasing Power 5.25 $

1,104

$

1,077

$

1,049

$

1,022

$

994

5.00 $

1,074

$

1,047

$

1,020

$

993

$

966

4.75 $

1,043

$

1,017

$

991

$

965

$

939

4.50 $

1,013

$

988

$

963

$

937

$

912

4.25 $

984

$

959

$

935

$

910

$

885

4.00 $

955

$

931

$

907

$

883

$

859

3.75 $

926

$

903

$

880

$

857

$

834

$ 200,000

$ 195,000 -2.5%

$ 190,000 -5%

$ 185,000 -7.5%

$ 180,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount. $200,000 home price‌ reduced by 10% to $180,000 with a 1% interest rate increase. www.DenverRealEstateOffice.com

RATE

Buyer’s Purchasing Power 5.25 $

1,657

$

1,615

$

1,574

$

1,532

$

1,491

5.00 $

1,610

$

1,570

$

1,530

$

1,490

$

1,449

4.75 $

1,565

$

1,526

$

1,487

$

1,448

$

1,408

4.50 $

1,520

$

1,482

$

1,444

$

1,406

$

1,368

4.25 $

1,478

$

1,438

$

1,402

$

1,365

$

1,328

4.00 $

1,432

$

1,396

$

1,361

$

1,325

$

1,289

3.75 $

1,389

$

1,355

$

1,320

$

1,285

$

1,250

$ 300,000

$ 292,500 -2.5%

$ 285,000 -5%

$ 277,500 -7.5%

$ 270,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount.

www.DenverRealEstateOffice.com

RATE

Buyer’s Purchasing Power 5.25 $

2,208

$

2,154

$

2,098

$

2,044

$

1,988

5.00 $

2,148

$

2,094

$

2,040

$

1,986

$

1,932

4.75 $

2,086

$

2,034

$

1,982

$

1,930

$

1,878

4.50 $

2,026

$

1,976

$

1,926

$

1,874

$

1,824

4.25 $

1,968

$

1,919

$

1,869

$

1,820

$

1,771

4.00 $

1,910

$

1,862

$

1,814

$

1,766

$

1,719

3.75 $

1,852

$

1,806

$

1,760

$

1,714

$

1,667

$ 400,000

$ 390,000 -2.5%

$ 380,000 -5%

$ 370,000 -7.5%

$ 360,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount.

www.DenverRealEstateOffice.com

RATE

Buyer’s Purchasing Power 5.25 $

2,761

$

2,692

$

2,623

$

2,554

$

2,485

5.00 $

2,684

$

2,617

$

2,550

$

2,483

$

2,415

4.75 $

2,608

$

2,543

$

2,478

$

2,412

$

2,347

4.50 $

2,533

$

2,470

$

2,407

$

2,343

$

2,280

4.25 $

2,460

$

2,398

$

2,337

$

2,275

$

2,214

4.00 $

2,387

$

2,327

$

2,268

$

2,208

$

2,148

3.75 $

2,316

$

2,258

$

2,200

$

2,142

$

2,084

$ 500,000

$ 487,500 -2.5%

$ 475,000 -5%

$ 462,500 -7.5%

$ 450,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount.

www.DenverRealEstateOffice.com

RATE

Buyer’s Purchasing Power 5.25 $

3,313

$

3,230

$

3,148

$

3,065

$

2,982

5.00 $

3,221

$

3,140

$

3,060

$

2,979

$

2,899

4.75 $

3,130

$

3,052

$

2,973

$

2,895

$

2,817

4.50 $

3,040

$

2,964

$

2,888

$

2,812

$

2,736

4.25 $

2,952

$

2,878

$

2,804

$

2,730

$

2,656

4.00 $

2,865

$

2,793

$

2,721

$

2,650

$

2,578

3.75 $

2,779

$

2,709

$

2,640

$

2,570

$

2,501

$ 600,000

$ 585,000 -2.5%

$ 570,000 -5%

$ 555,000 -7.5%

$ 540,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount.

www.DenverRealEstateOffice.com

RATE

Buyer’s Purchasing Power 5.25 $

3,865

$

3,768

$

3,672

$

3,575

$

3,478

5.00 $

3,757

$

3,663

$

3,570

$

3,476

$

3,381

4.75 $

3,651

$

3,560

$

3,469

$

3,378

$

3,286

4.50 $

3,547

$

3,458

$

3,370

$

3,281

$

3,192

4.25 $

3,444

$

3,357

$

3,271

$

3,185

$

3,099

4.00 $

3,342

$

3,258

$

3,175

$

3,091

$

3,008

3.75 $

3,242

$

3,161

$

3,080

$

2,999

$

2,918

$ 700,000

$ 682,500 -2.5%

$ 665,000 -5%

$ 647,500 -7.5%

$ 630,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount.

www.DenverRealEstateOffice.com

RATE

Buyer’s Purchasing Power 5.25 $

4,418

$

4,307

$

4,197

$

4,086

$

3,976

5.00 $

4,295

$

4,187

$

4,080

$

3,972

$

3,865

4.75 $

4,173

$

4,069

$

3,965

$

3,860

$

3,756

4.50 $

4,053

$

3,952

$

3,851

$

3,749

$

3,648

4.25 $

3,936

$

3,837

$

3,739

$

3,640

$

3,542

4.00 $

3,819

$

3,724

$

3,628

$

3,533

$

3,437

3.75 $

3,705

$

3,612

$

3,520

$

3,427

$

3,334

$ 800,000

$ 780,000 -2.5%

$ 760,000 -5%

$ 740,000 -7.5%

$ 720,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount.

www.DenverRealEstateOffice.com

RATE

Buyer’s Purchasing Power 5.25 $

4,970

$

4,846

$

4,721

$

4,597

$

4,472

5.00 $

4,831

$

4,711

$

4,590

$

4,469

$

4,348

4.75 $

4,695

$

4,577

$

4,460

$

4,342

$

4,225

4.50 $

4,560

$

4,446

$

4,332

$

4,218

$

4,104

4.25 $

4,427

$

4,317

$

4,206

$

4,095

$

3,985

4.00 $

4,297

$

4,189

$

4,082

$

3,974

$

3,867

3.75 $

4,168

$

4,064

$

3,960

$

3,855

$

3,751

$ 900,000

$ 877,500 -2.5%

$ 855,000 -5%

$ 832,500 -7.5%

$ 810,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount.

www.DenverRealEstateOffice.com

RATE

Buyer’s Purchasing Power 5.25 $

5,522

$

5,384

$

5,246

$

5,108

$

4,970

5.00 $

5,368

$

5,234

$

5,100

$

4,966

$

4,831

4.75 $

5,216

$

5,086

$

4,956

$

4,825

$

4,695

4.50 $

5,067

$

4,940

$

4,814

$

4,687

$

4,560

4.25 $

4,919

$

4,796

$

4,673

$

4,550

$

4,427

4.00 $

4,774

$

4,654

$

4,535

$

4,416

$

4,297

3.75 $

4,631

$

4,515

$

4,400

$

4,284

$

4,168

$1,000,000

$ 975,000 -2.5%

$ 950,000 -5%

$ 925,000 -7.5%

$ 900,000 -10%

Principal and Interest Payments rounded to the nearest dollar amount.

www.DenverRealEstateOffice.com

Historic Mortgage Rates by Decade

Decade 1970s 1980s 1990s 2000s

Average Rate

8.86% 12.7% 8.12% 6.29%

Freddie Mac

However, even at 5%, you’re not UNlucky, but TODAY, you’re WAY ahead. www.DenverRealEstateOffice.com

www.DenverRealEstateOffice.com

EXISTING Home Sales

www.DenverRealEstateOffice.com

Existing home sales suffered a fall of, but are on the rise.

NAR 10/2014

PENDING Home Sales

We’re above historically healthy levels. See the build since Jan 2012.

100 = Historically Healthy Level

www.DenverRealEstateOffice.com

NAR 10/2014

Case

Prices are still up over last year, but the acceleration rate is falling.

Shiller Year-Over-Year

PRICE CHANGES

www.DenverRealEstateOffice.com

S&P Case Shiller 10/2014

At the beginning of the year, we saw double digit price increases.

Case Shiller Year-Over-Year PRICE CHANGES Prices are still rising, but now by 5-6%. Projections say only up by 4% by the end of 2014. Watch your list price.

www.DenverRealEstateOffice.com

S&P Case Shiller 10/2014

S&P Case-Shiller Home Price Indices

10 and 20 city composites.

www.DenverRealEstateOffice.com

S&P Case Shiller 10/2014

% Change in Sales from last year Under $100k was a lot of distressed homes…

Where was the change? Almost ALL other price points. Over $1M up 8%? The wealthy know it’s a time to buy.

by Price Range Contact us at Rick@DenverLifestyle.com 720-432-5595 www.DenverRealEstateOffice.com

NAR 10/2014

Months Inventory of HOMES FOR SALE We’re leveling off at 5-6 months of inventory. As inventory is low, prices are up. 6 months is a healthy market. A little below that, prices will go up a little.

Contact us at Rick@DenverLifestyle.com 720-432-5595 www.DenverRealEstateOffice.com

NAR 10/2014

Months Inventory of HOMES FOR SALE As we built inventory up, price appreciation decreased.

Contact us at Rick@DenverLifestyle.com 720-432-5595 www.DenverRealEstateOffice.com

NAR 10/2014

Months Inventory of HOMES FOR SALE

When you list, because buyers WANT to buy right now, pricing accurately is more important than ever.

Contact us at Rick@DenverLifestyle.com 720-432-5595 www.DenverRealEstateOffice.com

NAR 10/2014

There is HUGE demand out there right now. New inventory will drive the market through the fall and winter‌

Year-over-Year Inventory Levels Contact us at Rick@DenverLifestyle.com 720-432-5595 www.DenverRealEstateOffice.com

NAR 10/2014

35%

Percentage of Distressed Property Sales The NE part of the US is starting to release their inventory, and numbers are still down.

14% 10%

Contact us at Rick@DenverLifestyle.com 720-432-5595 www.DenverRealEstateOffice.com

NAR 10/2014

Resources Slide

Slide Title

Link

5, 6, 8

Existing Home Sales, Pending Home Sales,

http://www.realtor.org

7, 9

Foot Traffic

https://magic.piktochart.com/output/3039836-foot-traffic-september-2014?sf5159951=1

10

Mortgage Credit Availability

http://www.mba.org/ResearchandForecasts/MCAI.htm

11, 12

Average FICO Score Conv, Average FICO Score FHA

https://www.elliemae.com/resources/origination-insight-reports

13

Mel Watt Quote

http://www.fhfa.gov/Media/PublicAffairs/Pages/Prepared-Remarks-of-Melvin-L-Watt,-Director,-Federal-HousingFinance-Agency-at-the-MBA-Annual-Convention.aspx

14

30 Year Fixed Rate

http://www.freddiemac.com/pmms

15

Mortgage Rate Projections

http://www.freddiemac.com/finance/pdf/October_2014_public_outlook.pdf http://www.fanniemae.com/resources/file/research/emma/pdf/Economic_Forecast_102314.pdf http://www.mortgagebankers.org/files/Bulletin/InternalResource/89713_.pdf http://www.realtor.org/sites/default/files/reports/2014/embargoes/phs-09-29/forecast-10-2014-us-economicoutlook-09-29-2014.pdf

16-17

Edelman Berland Survey

http://finance.yahoo.com/news/prudential-real-estate-q3-consumer-164800563.html

18

30 Year Fixed Rate Projection

http://www.freddiemac.com/finance/ehforecast.html

19-22

Cost of Waiting Slides

http://www.freddiemac.com/finance/ehforecast.html

23-32

Buyer’s Purchasing Power

http://www.keepingcurrentmatters.com/infographics/purchasingpower

33

Historic Mortgage Rates

http://www.freddiemac.com/blog/research_and_analysis/20140324_dirt_cheap_to_cheap.html

Contact us at Rick@DenverLifestyle.com 720-432-5595 www.DenverRealEstateOffice.com

Resources Slide

Slide Title

Link

35, 36

Existing Home Sales, Pending Home Sales,

http://www.realtor.org

37-39

Case Shiller

http://us.spindices.com/index-family/real-estate/sp-case-shiller

40, 41-43

% Change in Sales by Price Range, Months Inventory,

http://www.realtor.org

44

Year-over-Year Inventory

http://www.realtor.org

45

%of Distressed Property Sales

http://www.realtor.org

49

Joe Pulizzi Quote

http://contentmarketinginstitute.com/author/joepulizzi/

Contact us at Rick@DenverLifestyle.com 720-432-5595 www.DenverRealEstateOffice.com