REAL ESTATE MARKET UPDATE
An Information Service of RE/MAX Alliance/Douglas County
Real estate markets are always bottom-up markets. Which means? For a real estate market to sustain itself and flourish, the bottom of the market, that being the less expensive properties, must sell in a timely manner. When the bottom of the real estate market suffers, the entire market is negatively impacted.
The government’s $8,000 tax credit, which ends in late November/2009, unless there is an extension or change in the program, was designed to serve two purposes: (1) provide first-time home buyers an incentive to buy now, and (2) stimulate the housing market by getting entry level homes sold so current homeowners could “move-up” to more expensive properties. The result being that life would be breathed back into the overall housing market.
There were some hurdles to overcome to this seemingly perfect plan. First, with the economy limping along, home values had been driven down in most geographic areas around the country, resulting in a loss of homeowner equity. A home seller considering buying-up now had less cash in their current home to buy-up with. Second, almost overnight the home mortgage industry went from loaning money to anyone with a pulse to being over selective as to whom they would bless with their sacred funds. Finally, the uncertainty of the job market and the high unemployment rate has led to many potential move-up buyers deciding to rent rather than buy. This has resulted in the more expensive homes being forced under the boot of foreclosure or short sale, or they have become rental havens for those individuals choosing not to buy now or not having the ability to buy now.
Below is a brief overview of the absorption rates for single family homes for the Douglas County area through September for the past two years. The Absorption Rate is the length of time it would take for the existing inventory to sell assuming two things happen: (1) the rate of sales activity remains the same, and (2) no new listings come into the marketplace during that period of time (this is not going to happen). (Metrolist MLS is the source of information.)
“NEWS Articles of Interest for the Denver & Douglas County Real Estate Market”
Denver fares better than nation in home resale prices – According to a First American CoreLogic Inc. report released yesterday, Denver-area home resale prices dropped in August year over year, but were down far less than the national average. First American’s LoanPerformance Home Price Index (HPI) showed that metro Denver’s average home-resale price — including sales of distressed homes such as foreclosures and short sales — decreased 1.44% in August from the same month of 2008. Nationwide, resale prices dropped 10.1% in August from August 2008. By comparison, July home prices in the Denver area dropped 2.64% from those of July 2008, and June prices were down 3.21% year over year. However, when distressed sales are excluded, August home prices were down less than 1% — .58% — from the prior-year August. July prices, not including distressed sales, decreased 1.26% and June’s prices dropped 1.68% year over year.
Freddie Sees Weekly 30-Year Fixed Rate Pass 5% – The 30-year fixed-rate mortgage averaged 5.03% with an average 0.7 point for the week ending October 29, 2009, according to Freddie Mac’s Primary Mortgage Market Survey. Last week, it averaged 5.00%, and a year ago it was 6.46%. Sales have increased, prices are down and supply is starting to decline, according to Bankrate.com. Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School of Business, said in the Bankrate.com survey the housing market is not at a false bottom. “These are strong numbers, but not surprisingly strong numbers,” Wachter said. “The fundamentals are in place for a recovery — however, a slow recovery.”
Additional articles that you may find of interest:
Building a home yourself without swinging a hammer
9 news article
Homebuyer Credit Gets New Life
How to Tell Mortgage Rates Are Rising
FHA 203(k) Loans on the Rise
Investor Report: Fannie Mae’s PRP