I heard someone earlier this week say that the housing market has gone from a slow crawl to a brisk walk. I think that is the perfect metaphor to explain the recent changes in the real estate market. The market is coming back. It’s not roaring, but it’s coming back.
This week, according to Reuters.com, U.S. mortgage applications jumped as record low interest rates spurred a surge in demand for home refinancing loans. The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 32.2 percent to 1,159.4 for the week ended March 20. Refinancing accounted for 78.5 percent of all applications.
Furthermore, interest rates on mortgages fell after the Federal Reserve last week said it would buy Treasury securities for the first time in more than four decades as well as more than double its planned purchases of mortgage-related securities. Reuters.com reported that “Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.63 percent, down 0.26 percentage point from the previous week, reaching a record low….Interest rates were well below year-ago levels of 5.74 percent.”
Meanwhile, according to Realty Times, housing starts took a surprise jump of 22 percent in February over January's depressed levels. Most of the increase was attributable to apartments and condominiums, but single family starts were up by one percentage point, and new home permits were up by 11 percent, after months of sharp declines.
Existing home sales are also seeing some good trends. NAR reported this week that sales activity for single family, town homes, condominiums and co-ops rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January.
Last week I recommended that you watch Coldwell Banker president and CEO, Jim Gillespie on CNBC’s “Roadmap to Rebound” which focused on the state of the housing market. If you missed it, Gillespie stated that “the government could do a lot more than they are already doing in order to get the real estate market moving again.” Congressmen and economists continually say that in order to get the economy going, we need to first get real estate going. Gillespie believes that two key changes are needed in order to get the economy moving, and the first item that needs to be addressed is to set a fixed-rate mortgage. “Lowering the interest rate to 4% to 4.5% for 12 months is one way to get the inventory moving.” Along with setting a fixed-rate mortgage, increasing the tax credit to $15,000 and including all buyers of primary residences will help move buyers along and get the market to shift.
Gillespie also stated that the demand side needs to be looked at closely, because once we start to burn off the inventory that we currently have, prices will begin to stabilize and go up again, which will help those in distressed situations. “Fifty-five percent of loan modifications have failed after six months because jobs are not being created and homeowners are losing the jobs they have,” says Gillespie. “In order to create jobs, we need to create demand, both of which will get the housing market and economy moving.”
I for one appreciate seeing our leadership team speaking out on our behalf, serving as the visionaries for our industry. It’s enlightening and certainly makes me proud.
Now, let’s take a look at this week in real estate:
- Denver Central—Our Denver Central office reported that spring is adding many new observers to open houses and the low rates combined with the new tax incentives have many buyers anxious to tie up a property to add to the interest deductions they get normally. They know the longer they are in the home the more interest is available to deduct for 2009 tax year. With the new additional incentives it makes for a nice bonus around April 2010.
- Douglas County—Our Southwest Metro office reports that showings this past weekend were the best yet! Our open house activity was fantastic with Agents having such busy open houses that some ran out of flyers! Buyers seem anxious to find homes and our Agents are busy writing offers. It seems as though sellers and buyers are beginning to see a little light at the end of the tunnel. There is excitement around the office and among the Agents.
- El Paso County—Our Colorado Springs office reports that open houses are still active. We’re seeing lots of buyers in town just checking things out to see if they want to accept a transfer to Colorado Springs. USAA transferees from Sacramento are getting several options for relocating as are some Lockheed people from San Jose. Foreclosures are slowing down as are short sales. Buyers get frustrated when they try one and avoid them after that. Lenders are tightening up finally.
- North Metro—The North Metro office notes that the market under $250,000 is very hot right now. Inventory is low and several homes are getting multiple offers. Interest rates are low and buyers have gotten off the fence.
- Parker—Listings as well as showings were up again last week. The traffic through open houses is way above average. For the first time in months we see stable values in some communities. Canterberry Crossing, Stonegate and other established neighborhoods show a drastic increase in sales activity. More and more, energy priced listings receive multiple offers. We continue to watch the trend closely and are confident that we will be able to announce a shifting market for some areas in Douglas County soon.
- Southeast Metro—Showing activity continues to increase. Our office set 660 showings last week! Several market adjustments were put into place on our listings. Lots of traffic at open houses and buyers are making offers quicker as inventory continues to decrease in the price range $200,000 to $300,000. Outer areas are still sluggish as inventory is at a stand still.
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(Source: Chris Mygatt, President and Chief Operating Officer, Coldwell Banker Colorado)
After a week of positive indicators, my best advice is for buyers to get out there. There are some fantastic deals out there right now and as more people begin to realize it, competition will come back and begin to drive activity. You know what they say about the early bird.
Leigh Bramer
Coldwell Banker
Broker Associate
Direct: 720-291-1111
Leigh@BramerRealEstate.com
http://www.bramerrealestate.com/
Go to www.BramerRealEstate.com to search for all homes for sale in the Denver Metro Area and be the first to be notified when a home goes on the market. Find out what your home is worth now.
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