Funny how when things are good people, tend to forget that things are good, and good things don’t necessarily last forever.  I’m referring to interest rates.

The other day, a client made mention of a “high interest rate” being 6%.  It struck me funny,although I didn’t laugh.  To me a 6% interest rate is actually pretty darn good!  Of course in this market, it’s high, but I can remember when interest rates were 18% on mortgage loans!

Yes, that’s true, in the 1980’s we saw inflation and high interest rates like never before.  I started selling real estate in 1984 and found myself “justifying” a TERRIFIC interest rate of only 14%!  (ouch!) Yes, of course home prices were much lower then.  We were selling nice entry level homes in the $40 and $60 thousands, but still at 18% that was like Master Charging a house!

Well these days of good interest rates maybe coming to a close. Starting April 1, 2010 the FED is stopping it’s purchase of mortgage backed securities.  This isn’t new news.  In fact the FED has been broadcasting the decision for several months now.

Experts seem to agree, mortgage rates will increase.  It won’t be steep, (like the 1980’s thankfully!) but we do expect to interest rise.

How will this affect the average Denver real estate buyer?  Well a 1% increase, say 5% to 6% on a $250,000 mortgage is $156 a month.

That means if a home buyer is qualified at 5% for $250,000, when the interest rate goes up, the same buyer can only qualify for a loan of $224,000!

That is a big difference!

Dan Green’s Mortgage Report uses logic saying the rate came down by one percent when the Fed stepped into help, therefore it might go up by the same amount.  Nobody knows.  One thing we all can agree on is to lock your rate.

If it’s time for you to buy a home, that time is probably right now.

Start your home search here, click on Denver Home Search in the bar above.  You’ll love the convenience of being able to search the MLS-idx data base, save searches and favorite properties.  Please call me if you need help.

Related posts:

1. Interest Rates Inch Up
2. Mortgage Interest Rates Remain Low
3. Interest rates

Recent announcements by FHA will have impacts on our spring time (and beyond) buyers.  The rules mean more money down and higher payments, here’s the scoop:

1. Beginning April 1, 2010 the Upfront MIP is increasing from 1.75 to 2.25.  (MIP is the Mortgage Insurance Premium that all buyers using an FHA loan get to pay, up front in order to obtain the loan.)  to give you an idea of how much this increase is, let’s talk numbers.  On a $200,000 the Upfront MIP increases by $1,000.  Typically the buyer finances this amount into the loan, making that $200,000 loan a $204,500.  This increase raises the buyer’s payment on a 5% loan by $5.35 a month for 30 years.
2. The good news for investors (AKA flippers) FHA has implemented a waiver (beginning Jan. 15, 2010) that allows properties to be transferred without having to wait the required 90 days.  This rule which personally I have never understood has only been waived for one year.  Apparently FHA is realizing that it’s not good to interfere with investors who are actually helping our economy?
3. Buyers who’s FICO credit scores are less than 580 (this is a relatively low score) will now be required to put 10% down when purchasing a home using FHA financing. This is a double whammy for those with low scores, typically they have a low score and no cash.  This rule is reinforcing the importance of maintaining a good credit score.

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Fisherman have the reputation for telling stories about “the one that got away.”  It’s always the biggest, strongest, oldest most difficult fish in the water. But alas it got away.

Well photographers have the same bragging rights.  Sometimes, like me we even can provide proof, sort of.

This is my fisherman-like tale.

After many days of boring, flat, cold dead winter light I was anxious to find something worthy of shooting.  One morning I rose before dawn, dressed and headed out in hopes of catching the sunrise.

I’d checked the time table and new what time the sun would come up, but I was late. The sun really lights the land long before it rises above the horizon.  I figured that out on my way to the planned destination.  There wouldn’t be enough time to reach it, so I went to plan B.

The sunrise itself is a worthy vision, but it becomes so much more interesting when there’s life included. This morning I almost had that wonderful silhouette of a horse, except the horse didn’t cooperate.

By the time I got set up he was  on his merry way to the other side of the hill where the grass was obviously greener!

He got away.

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Reporting on a two-month lag, the government said home values rose 0.7 percent in November.

National home prices are at their highest point since February 2009.

But before we look too much into the FHFA’s Home Price Index, it’s important that we’re cognizant of its shortcomings; the most important of which is its lack of real-time reporting.

According to the National Association of Realtors™, 80% of purchases close within 60 days. As a result, because of its two-month delay, the Home Price Index report actually trails today’s market data by an entire sales cycle.

This is one reason why home values appear to be rising even while new data shows that both Existing Home Sales and New Home Sales fell flat last month.  The home valuation report is using data from November; the sales reports are using data from December.

The Home Price Index is a trailing indicator and next month, as the Spring Market gets underway, the government will be reporting data from the holidays.

The same is true for the Case-Shiller Index. It, too, operates on a 2-month lag.

All of that said, however, long-term trends do matter in housing and the Home Price Index has shown consistent improvement over the last 10 months.  In many markets, home sales are up, home supplies are down, and values have increased.  This trend should continue into the early part of 2010, at least.

If you’re wondering whether now is a good time to buy a home in Littleton , consider low prices, cheap mortgages and an available tax credit as three good incentives.  By May, none of them will likely be available.

Related posts:

1. Home Prices On The Rise, Says The October Home Price Index Report
2. Home Inventories Plummet, Foreshadowing Higher Prices By Spring 2010

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.

In its press release, the FOMC noted that the U.S. economy “has continued to strengthen”, that the jobs markets is getting better, and that financial markets are supportive of growth.

There was no mention of the housing market’s strength.  The last 3 statements from the Fed included that specific verbiage.

It’s the fifth straight statement in which the Fed spoke about the economy with optimism.  This should signal to markets that 2008-2009 recession is over and that economic growth is returning to U.S. economy.

The economy isn’t without threats, however, and the Fed identified several in its press release, including:

1. Credit remains tight for consumers
2. Businesses are reluctant to hire new workers
3. Housing wealth is down

The message’s overall tone, however, remained positive and inflation appears is still within tolerance.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to wind down its $1.25 trillion commitment to the mortgage market by March 31, 2010.  This is noteworthy because Fed insiders estimate that the bond-buying program suppressed mortgage rates by 1 percent through 2009.

Mortgage market reaction to the Fed press release is, in general, negative. Mortgage rates in Denver are rising this afternoon.

The FOMC’s next scheduled meeting is March 16, 2010.

Related posts:

1. Home Inventories Plummet, Foreshadowing Higher Prices By Spring 2010
2. Retail Sales Dropped In December And Now So Are Mortgage Rates
3. Interest Rates – What’s the Low Down?

The next time you think you’ve outgrown your home, imagine what life would be like in New York City’s “skinniest home”. It’s barely wider than your wingspan.

In Greenwich Village, there’s a single-family, 3-story residence in which the interior living space width measures just 8 1/2-feet. By way of reference, that’s 4 inches more narrow than the Smart Fortwo electric automobile.

Even the home’s USPS street address hints at its size.  Built on an alleyway, nestled between 75 Bedford Street and 77 Bedford Street, the diminutive home is officially known as 75 1/2 Bedford.

It just sold for $2.1 million.

Meanwhile, big price tags for little homes is nothing new. In 2008, the “Little House” in Toronto sold for the equivalent of $511 per square foot.

(Image courtesy: Wikipedia)

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Metro Denver 2010 Economic Forecast

Denver continues to maintain solid fundamentals and appears to be on the road to exceed this year.  According to Chief Economist Patty Silverstein the following points contribute to this opinion:

• Denver ranks 1st among the nation’s most desirable places to live, according to a 2008 by the Pew Research Center
• A 2009 poll by Harris  Interactive showed Denver tied for second place with San Francisco on a list of the nation’s favorite places to live
• Forbes called Metro Denver one of  “10 Best Cites for a Housing Recovery” and the nation’s best metropolitan area in which to buy a home
• Real Estate correspondents with NBC’s “Today” show named Denver the U.S. city most ready for a housing rebound
• Builder magazine named Denver among five housing markets likely to recover quickly

As I continue to explain to my relocation buyers, Denver is positioned well because we didn’t have the CRAZY inflation of housing prices as in Las Vegas, California and Arizona.  Now when they are falling, we are maintaining values.

Look around, do the research you will certainly discover it’s not to hard to find good solid data that Denver is going to be OK.

We don’t need economists to tell us this is a very good place to live! (But we’re glad they agree!)

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FHA home loans are federal assistance mortgages made by lenders, and backed by the government. The FHA doesn’t make loans to Colorado homeowners — it insures loans made to homeowners by federally-qualified lenders.

By all accounts, FHA home loans are surging in popularity.

• 2006, FHA insured 3.3% of all mortgages made
• Q2 2009, FHA insured 19.2% of all mortgages made

A major reason for the increase can be tied to guidelines.

As compared to its conforming mortgage cousins Fannie Mae and Freddie Mac, FHA home loans have lower downpayment requirements and looser credit standards. The FHA allows downpayments of 3.5 percent for homes in Englewood and Fannie Mae and Freddie Mac do not, as an example.

Another reason is that FHA home loans aren’t subject to credit score fees the way that conforming mortgages are. Through Fannie or Freddie, a home buyer with a 650 FICO and 20% down is subject to 3% in risk fees.  Via the FHA, the fee is zero, making FHA the better “deal”.

The FHA published its 2010 loan limits. There’s no change from 2009.

The base 2010 FHA loan limits are:

• 1-unit : $271,050
• 2-unit : $347,000
• 3-unit : $419,400
• 4-unit : $521,250

We say “base” because these loan limits don’t apply to all areas equally.  Higher-cost regions get higher loan limits, based on typical home values. Homes in Los Angeles County, for example, can be FHA-insured up to $729,750 in 2010, and there are special exceptions made for Alaska and Hawaii.

The official FHA announcement included a complete, county-by-county FHA loan limit list. The first spreadsheet shows each county at or above the $729,750 maximum; the second list is everyone else.

If your home’s county is on neither list, use the “base” numbers above.

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Homeowners looking to sell their homes will find good news in the December 2009 statistics!

Now don’t get fooled, absorption rates are better when they are lower.  Like golf, not bowling we want to see a little number!

Our market is still bifurcated with homes in the lower price ranges selling quickly while homes priced in the higher ranges are still finding it hard to find buyers.

Close examination of the sales per price range graft will also show sales movement across all levels. I’m loving that little SPIKE in the Over $500,000 range!  We really need that!

This is really heartwarming to the real estate industry.  It’s so much better when we can deliver good news than bad!

Average residential sales prices are also trending up.  This honey of a chart looks like a roller coaster with all it’s ups and downs.

Last but not least, my chart comparing the inventory, new listings, sold and those under-contract has some nice lines to it.  Note how the inventory is lessening and the solds are holding steady.

We need inventory folks!  If you are thinking of selling your home, the time is approaching.

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Like real estate, it appears that foreclosure activity is a local phenomenon, too.

As reported by RealtyTrac.com, more than half of all foreclosure-related activity in 2009 came from just 4 states:

1. California
2. Florida
3. Arizona
4. Illinois

More than 1.4 million filings made in 2009 are attributed to the above states. Furthermore, each ranks in the Top 10 for 2009 Foreclosures Per Capita.

The other states are Nevada, Utah, Georgia, Idaho, Michigan and Colorado.

Versus 2008, foreclosures are up 21 percent nationwide and that’s a big number, but a deeper look at RealtyTrac’s annual reports reveals a more positive undertone on the housing market.

1. 40 states fell below the national Foreclosures Per Capita average in 2009
2. Foreclosure activity fell on an annual basis in 10 states as compared to 2008

Foreclosures are still prevalent, though, and buying homes in foreclosure in Littleton continues to be big business.  First-time buyers, move-up buyers, and real estate investors each are bidding aggressively.

Distressed homes account for one-third of home resale activity, according to an industry trade group.

That said, buying foreclosures can be tricky.

First, properties are often sold “as-is” and the cost of repairs may unwind the home’s status as a “value buy”.  Furthermore, a lender may require specific fixes to be made prior to closing and that, too, costs money.

Second, buying a foreclosed home in Colorado isn’t as streamlined as buying a “normal” home. Closing on a foreclosure can be a 120-day process or longer. A 4-month time-frame may not fit your schedule.

And, third, finding foreclosures can be difficult. Despite the growth in foreclosure search engines, it still takes a good real estate agent to uncover the best homes at the best prices.

Read the complete foreclosure report and take a peek at RealtyTrac’s foreclosure heat maps.  If you like what you see, talk to your real estate agent about what to do next.

There’s still good deals in the foreclosure market — you just have to know where to find them

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