Denver Housing Supply Still Tight for First Time Buyers

First Time Buyers  The real estate market is all about numbers. Well… numbers and people. The national housing market has recovered in most of the country, but the number of houses […]

December 27, 2016 // Tracy Shaffer // 2 Comments //

First Time Buyers 

The real estate market is all about numbers. Well… numbers and people. The national housing market has recovered in most of the country, but the number of houses available for first-time buyers remains tight. Prices in the top-producing cities are at or above the peak levels of 2006, building quicker than normal equity gains for lucky buyers who got in, but these same gains are leaving others on the sidelines. Research shows the number of affordable homes on the market for the average first-time home buyers took its biggest year-over-year drop in three years, falling 12.1 percent, and real estate website, Trulia, states the shortage of affordable homes is worsening. But even in Denver’s hot real estate market, I’ve found that for my buyers time and persistence pays off. Good news for those millennials living in their parents’ basements? Wages are rising and with all that money they’re saving on rent (ha-ha) gathering up a down-payment should be easier. The bad news is that home prices are rising faster.  To afford the median-priced starter home, the average first-time buyer will have to pay around 39 percent of their monthly income — up 2 percent in three years– so it might be time to cut down on those micro-brews.  “Move-up Buyers” fare a bit better with 25.5 percent of their monthly income needed to purchase and upper-end buyers will need a paltry 14 percent of monthly income to afford a premium home. At least that’s what Trulia data has to say. And with interest rates on the rise, buying power will be diminished, so I say–

              “Hire an aggressive Buyer’s Agent and BUY sooner than later”.                                                                                                                                      What’s Up With Last Week’s Interest Rates?

Mortgage backed securities (FNMA 3.50 MBS) gained +40 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower from the prior week. The bond market closed early last week, most bond traders left their desk Thursday at noon and wont return until next week.  MBS moved in a narrow range on lighter volumes as we basically drifted sideways within our trading channel.

Domestic Flavor: GDP:  We got yet another upward revision to our 3rd QTR GDP.  This time it moved up from 3.2% to 3.5% which was higher than market expectations of 3.3%.  Much of the strength was driven by consumer spending which was up 3.0%.

Durable Goods: The November data was better than expected.  The headline reading hit -4.6% vs est of -4.7% and the core (ex Transportation) grew 0.5% vs est of 0.2%, plus the October core data was revised upward from 0.6% to 0.8%

Housing:  Weekly Mortgage Applications actually increased for once.  They moved up by 3.0%, both Purchase and Refinance applications were up 2.5% respectively.

Existing Home Sales: The November data was better than expected with a 5.61M vs 5.50M reading. The median price rose 0.3 percent higher in the month to $234,900 for a year-on-year gain of 6.8 percent. Supply fell a very steep 8.0 percent in the month to 1.850 million which is down 9.3 percent year-on-year.Mortgage backed securities (FNMA 3.50 MBS) gained +40 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly lower from the prior week.

 

Information provided by American Dream Mortgage

The above are the major economic reports that will hit the market this week. Each has the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be consulting with my team,  watching these reports closely for you and let you know if there are any big surprises.

 


  • January 17, 2017

    There are always times when the real estate goes up and then suddenly there is a sudden fall in the prices as well.

    • Tracy Shaffer
      January 18, 2017

      It doesn’t happen suddenly. The largest driver of real estate prices is basic supply and demand. Things rise and fall seasonally but those changes are quite marginal. Things outside of your neighborhood or greater metro area can affect real estate as well; a sharp rise in interest rates for example, will send buyers out scrambling to buy before they rise again or may keep them from entering the market in hopes they will fall again. After a decade of historically low rates, this is less likely to happen as rates climb, even this, falls into the realm of supply and demand. We have experienced a slowing of the market recently, cooling off prices a bit. With fewer buyers out in the holiday season home values were not driven up by multiple offers. Thanks for your comment, love the dialogue.

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