Ron Estell’s Blog

 How’s the Market?

Mortgage rates have risen since last month’s report of 4.75%.  Bond market uncertainty has pushed interest rates towards the 5.6% mark.  Local inventory of unsold homes continues it’s downward trend.  Buyers in some areas are finding it difficult to find the home they want at the price they want.  Sales in the $250,000 and below range are still moving rapidly.  Some banks are discovering that they need to fix up that foreclosure before it can be sold.  Analysts are still predicting that the Denver metro area will be among the first to pull out of the market slump.

 News 2 Use

A bill was introduced to Congress this week that would expand eligibility for the federal tax credit on home purchases.  It also proposes an increase in the credit to $15,000.  Obviously a lot of debate will be expended on the proposal and it likely will not emerge from Congress as proposed.  But, we’ll track this one as potential good news. Did you know that Excel Energy is offering energy audits that have been discounted by 60%?  The audits are conducted by local firms under the watch of Excel Energy.  The audits are customizable with a maximum charge of $125 for an entire audit that includes infrared imagery and blower door tests.  Energy conservation is just as important in the summer as the winter.  I found out that an inefficient freezer in my basement was causing my electric bill to far exceed what it should have been for the number of people in my household.  Call if you would like more info on this program.  Ask about the Governers’ incentive program and others that will contribute to your energy efficiency.  

I’ve been asked if I received my ’Green’ certification.  I did!  If you are looking for answers on environmentally friendly products or energy conservation, let me know.  I’ll be happy to provide you with the information you will need to achieve your environmental goals. I’ve updated my CentennialHomeGuy.com website to include the week’s new HUD listings and Short Sales that have just hit the market.  If you are an investor or just looking for a good deal you will want to take advantage of this information.Also, check out the free home search information available on CentennialHomeGuy.com and RonEstell.com.  Conduct your own Foreclosure search on my site or ask me to set up a search for you.  I’ll be looking forward to your call. 

How’s the Market?

Mortgage rates continue to hold steady at about 4.75%. I honestly don’t see them moving significantly lower. As the selling season ramps up and the market strengthens, there will be more demand for mortgages. Increased demand normally signals higher prices. The trend of falling inventory (fewer homes on the market for buyers to look at) continues.  We count the number of expired listings (homes that have been taken off the market because they didn’t sell) and find historically low levels here also.  Sales will need to pick-up, however before we can declare a seller’s market. 

News 2 Use

Not everyone needs to buy or sell a home.  I try each month to bring you news that is valuable to everyone.  I think that is the least I can do for those of you who read this newsletter every month.  Let me know what you think. Did you know that you could get a federal rebate for purchasing a new home?  Call me for details.  

For those of you considering home purchases that would move you to a more energy efficient home, now is a great time to buy both new and previously owned homes because of today’s rates and prices.  Additionally, buyers that want to upgrade the energy efficiency of their prospective homes can readily obtain improvement loans that will allow them to upgrade before they move in. 

Should Smoke detectors be replaced?

Studies show that untested smoke detectors lose about half of their dependability after a 5 to 7 year period. As a result many experts recommend that smoke detectors be replaced about 8 to 10 years. Read the manufacturers instructions as they usually have recommendations.  Can I clean my smoke detector? Dust can damage your detector’s sensitivity. Most units need to be cleaned at least once a year, just use your vacuum cleaner to clean dust out of unit. Read the manufacturers instructions manual. Tip: There are a significant number of rebates and tax credits available from government and energy providers for homeowners that want to improve the comfort of their homes through energy efficiency.  ..Enough that it could be confusing to determine if an energy improvement you are making qualifies for a plan, or what incentives are being offered.  Don’t miss out on benefits that you should receive as a taxpayer and utility subscriber.  Call me for more info. 

• How’s the Market? Rates have held steady at about 4.75% for the month.  Single family homes on the market, yet unsold (inventory) been reduced 20% since March of last year.  Condominiums inventory is down 16%.  Sellers will find this an attractive situation as the economy builds steam and consumer confidence returns.Sales, however, continue to lag behind last year by 12% for single family homes and nearly 19% for condominiums.  We are seeing more 1st time home buyers in the last few weeks.  This leads us to believe that the $8,000 tax credit will spur sales in the area.  Some buyers are getting their tax credit up front to use as down payments, through a new program offered by CHFA (Colorado Finance and Housing Authority). Visit www.colohfa.org. News 2 Use If you are replacing smoke alarms, this might be a good time to update to a combination smoke/carbon monoxide alarm. Beginning July 1, 2009, the Real Estate Commission will require all sellers of residential property to have a properly installed and operational carbon monoxide alarms near every sleeping area.  Call me for requirements.On May 7th I will receive a new designation from the Green REsource Council.  If you are interested in “green” homeownership, be sure to give me a call.Fannie Mae and Freddie Mac modified nearly 24,000 loans during the fourth quarter of 2008.  See if you qualify.  Click here or go to:http://www.makinghomeaffordable.gov/modification_eligibility.htmlWould you like to learn about innovative home products and projects around the home that yield a high return, important home maintenance tips or receive periodic Project Starter Coupons for special savings at Lowe’s?  If you would, send me an email with “Lowes” in the subject line.

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How does the Stimulus Plan Impact Home Ownership?

 2008 Year-End Wrap-up

Mortgage rates are hovering around 5%.  Home buyer incentives have been implemented and more are expected. This is significant in that at 5% a $300,000 loan principal and interest payment would be $1,610. At 6.5% the loan would have carried a price tag of $1,896 per month.  Over the life of the loan the savings is $99,360*. 

The only thing we can be certain of when it comes to interest rates is that they fluctuate.  Will rates go down further?  I wish I knew.  But, at today’s interest rates you could save more in interest than you might save in sale price.  Remember, last month rates were at 4.75%. 

Mortgage and general economic impacts experienced since October had an impact that reverberated through all aspects of the nation’s business communities. There were 49,789 sales of single family homes and condominiums in 2007.  2008 closed with a total of  41,683 sales for an average of 3,474 sales per month.  Although the pace of sales was off of last year, sales did not collapse. In fact, home inventory levels relative to sales reduced significantly over the course of the year. 

Ending inventory level for 2007 was 24,603 single family homes and condominiums.  We finished 2008 with an average of 19,600, a 25% reduction.This MonthDecember performance was 10.75% better than November and at .47% was slightly better than December 2007. Single family residence sales were 9.77%, better than November and 5.34% better than December 2007.  The big month over month gain went to town homes and condominiums which was 14.87% better than November.  But, they were unfortunately lower than December 2007 by 15%. 

Average days on market declined for both residential components on a month over month basis, but sent a mixed signal when compared to the increase in December to December days on market.

* For illustrative purposes only.  This is not an offer to provide loans. 

What is the Impact You?

November continued the trend of lower inventory levels.  As we expected, sales were lower due to the October financial upheaval.  I remain optimistic for Metro Denver’s recovery, even now.  This month I explain why you shouldn’t wait to move up to a new home. Nationally most markets do not have the positive conditions that exist in our area. Share your thoughts with us at restell.featuredblog.com.  

This Month

Spurred by findings of the PMI Group, a mortgage loan insurance company, Yahoo (Oct ’08) declared Denver to be a balanced market and in the top 7 areas poised for a rebound.  In another article The Denver Business Journal reported that the Urban Land Institute has declared that Denver markets are among the top 10 real estate markets to watch in 2009. Here is more positive news:· Interest rates as of today (12/22/08) are hovering in the mid 4% range, the lowest in over 28 years.· Inventory continues to decline.· Despite an overall negative sales rate in October, large areas of the city are experiencing increased sales in excess of 20% on a year over year basis.  Tempting?  Give me a call.

So What?

The mortgage market is just like the real estate market or the stock market in one compelling way.  They are all cyclical.  Any of them could change direction very quickly. Here is what it means to you:

When interest rates go up, they can have a  greater impact, much more quickly on your ability to purchase than housing prices.

Selling your home today is not difficult.  We sold 2,900 homes last month in the area.  Another 3,600 went under contract.  Let me show you how you can benefit by selling your home and buying your dream home by calling today.

Mortgages are readily available at great rates and some are available with no down payments. 

What is the Impact You?The month of October saw a continuation of the trend of lower inventory levels and higher sales.  I fully expect that next months sales will be much lower because of our current economic difficulties and seasonal patterns.  This however, does not mean that our recovery will falter substantially. Give us your analysis by posting your thoughts at restell.featuredblog.com.  This MonthFinancing for homes up to $419,000 is still readily available.  Many assistance plans are available that could allow you to move into a new home with no money down and very competitive rates. Loans in excess of $419,000 are considered “Jumbo Loans”.  Sales in this category have slowed somewhat due to higher interest rates required by investors.  The hardest hit segment is homes in the $750,000 and above range.  If you are in the market for a home in this price range, now is the time to get a great buy. Sales in October were 11% better than the same period last year, signaling an improving sales climate.  Inventory is also down 20% over the same period and now is at a level not seen since mid 2005.   So What?Right now nothing says the economy will bounce back before the first of the year.  But, in real estate,  the formula of reduced inventory and increased sales put an upward pressure on prices. Just like the stock market, we don’t exactly know when prices will improve.  The only way we will see it is in the rear view mirror, after it happens.  When the market turns it will turn rapidly.  Real estate prices are not as volatile as the stock market, but it is very easy to miss the first fruits of a upswing. 

In contrast to economic reports, home sales were up significantly compared to September of last year.  14.1% to be exact.  And it is also 10% over 2006. But, year to date sales remain 6.7% under last. Inventory continues to decline.  This month we are down 8.9% on a year to date basis.Again this month condominium and townhome sales were significantly lower than the composite statistics.  3 & 6 Month Moving averages of Inventory to sales continue to tell us that a home on the market today 

Loan Availability

Yes, loans are available.  FHA loans can now be obtained up to $406,250.  Down payment requirements are 3.5% effective 10/1/08.Have you owned a home in the last 3 years?  If not, you may qualify for down payment assistance.Yes, conventional loans are still available.  Even with current economic uncertainty.  Are you curious to know if you might be able to take advantage of current market prices?  I’ll give you three references of mortgage lenders that I know to be ethical. So, Shouldn’t I Wait? Right now nothing says the economy will significantly improve for some time.  So, the question becomes how do your needs impact the move question.  You might be pleasantly surprised that a move could make sense.   Let’s talk about it.  There are circumstances that could work for you. 

 Will Fannie & Freddie Impact You?

Interest rates are widely expected to drop to as low as 5.5% in the coming weeks.  If you wanted to buy a home and had been pushed aside by rising interest rates, this may be your opportunity to re-enter the market.  If you are a seller, national observers expect a boost to home sales.    The market is not right for everyone to make a move, but many will find this shift to their benefit.  I offer myself as an information source for anyone that might be wondering if this is the time for them to make a move.  I don’t pressure.  I answer questions in a manner to provide you with the information you need.  If now is not the time to make a move I’ll let you know.  Call me for a free, no obligation, no cost consultation.   This Month Average monthly inventory of detached, single family homes in Metro Denver has declined steadily since May & this month was nearly 18% lower than for the same period last year.  This is significant, average months of inventory has declined to 2005 levels. Condo and Townhome inventory was down  26% and sales down nearly 10%.  This segment remains solidly in a buyer’s market and continues to attract investors.  Lower interest rates will be welcome especially to first time home buyers in this market segment and should stimulate sales.    FHA Loan Changes FHA permits a seller and other parties to make contributions toward a buyer’s closing costs and financing concessions.  Allowed is a maximum of six percent of the sales price of a property.   The buyer must provide 3% of the purchase price as a down payment, increasing to 3.5% effective October 1st.  Nehemiah assistance programs are scheduled to end October 1st also, stay tuned.  New Foreclosure Analysis -Mixed Regional Results There were differences in delinquency and foreclosure rates by state.  While delinquency rates rose across the country from the first quarter to the second quarter of 2008, not all states experienced the same pattern.  The top fve states with the highest quarter-over-quarter increase in delinquency rates were Delaware (104 basis points), Mississippi (103 basis points), Massachusetts (100 basis points), Maryland (96 basis points), and Indiana (92 basis points).  On the fip side, the states with the smallest change in delinquency rates were South Dakota (20 basis points), North Dakota (27 basis points), Wyoming (32 basis points), Colorado (33 basis points), and Oregon (34 basis points). Get a free detailed analysis of US housing trends, send a blank email to trends@RonEstell.com