Denver Lifestyle速 Real Estate Market Update NOVEMBER 2014
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-Home sales -Pending home sales - Foot traffic - Mortage rate predicitons - The effect of interest rates on the housing market - and more‌
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EXISTING Home Sales Started slow, but continuing to climb, which, for this time of year, is NEWS!
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PENDING Home Sales Pending home sales numbers are rising. Buyers at this time of year are serious‌ they are not window shoppers.
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Foot Traffic (indicator of future sales)
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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.
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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.
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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
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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
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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
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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.
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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.
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NAR 10/2014
Months Inventory of HOMES FOR SALE As we built inventory up, price appreciation decreased.
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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%
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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