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Wednesday Morning Coffee - Buyer's Purchasing Power

by Allison Simson

Happy Wednesday Morning to YOU!

With all the talk about interest rates in the news right now, I thought this little graphic would shed some light on how rates actually affect real estate buying power!  A 1% increase in interest rate equates to a 10% less purchase price with the same payment.  Also of note, in Summit County, CO last year, almost 50% of our transactions were cash deals! 

For more information about any specific property, complex or neighborhood, please reply to this email and we will get you what you are interested in right away! 

"Boomerang Buyers" - What Happens After Foreclosure

by Allison Simson

'Boomerang' Buyers Flying Back [INFOGRAPHIC]

Boomerang Buyers InfoGraphic

Note: “Boomerang buyers” are former homeowners who have gone through a short sale, foreclosure, or bankruptcy in the past few years and are saving up for a down payment to purchase a home again.

 

Why NOW is the Right Time to Sell

by Allison Simson

The #1 Reason You Should Sell Now

Posted: 13 Jan 2014 04:00 AM PST

Home For Sale Sign in Front of New House

The price of any item (including residential real estate) is determined by ‘supply and demand’. If many people are looking to buy an item and the supply of that item is limited, the price of that item increases.

According to the National Association of Realtors (NAR), the supply of homes for sale dramatically increases every spring. Putting your home on the market now instead of waiting for the increased competition of the spring might make a lot of sense.

Buyers in the market during the winter months are truly motivated purchasers. They want to buy now. With limited inventory available in most markets currently, a seller will be in a great position to negotiate.

2014 and Interest Rates

by Allison Simson

Predictions for 2014: Interest Rates Will Increase Significantly

 

Predictions for 2014: Interest Rates Will Increase Significantly

Posted: 08 Jan 2014 04:00 AM PST

Most experts are calling for an increase in mortgage interest rates in 2014. However, we believe the increase will be more dramatic than is being projected. We believe rates will be closer to 6% than 5% by year’s end.

The Fed announced last month that they would be pulling back some of their stimulus package which has helped the housing market by keeping long term mortgage rates at historic lows for the last few years. This should come as no surprise as the KCM Blog has been warning of this likelihood over the last several months.

1.8 Interest Rate Projections

Above are the most recent projections of where rates will be at the end of 2014 by the four major agencies. However, we believe that the government is not afraid to shoot right past these levels.

Doug Duncan, chief economist for Fannie Mae, this past summer announced:

“I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.”

And Frank Nothaft, Freddie Mac VP and chief economist, at virtually the same time explained:

"As the economy continues to improve, we expect to see continued upward movement in long-term interest rates… At today’s house prices and income levels, mortgage rates would have to be nearly 7 percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.”

Only time will tell. However, we feel that rates will be in the 5.75-6% range by year’s end.

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For more in depth coverage of mortgage interest rates and what impact tapering will have on future rates, sign up for a FREE 14 Day Trial of our full membership service, Keeping Current Matters here.

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Predictions for the New Year

by Allison Simson

Predictions for 2014: Sales Will Surge

Many housing pundits are calling for home sales to do slightly better in 2014 than they did in 2013. To the contrary, we strongly believe that home sales will skyrocket with increases of 10-15% in 2014. Here are the three categories of buyers we believe will create this strong demand.

The First Time Buyer

The Urban Land Institute recently released a report, Emerging Trends in Real Estate 2014, projecting that 4.48 million new households will be formed over the next three years. Millennials will make up a large portion of these new households. With the economy improving, we believe they will finally be moving out of their parents’ homes and, when they compare renting versus buying, many will choose homeownership.

The Move-Up Buyer

Over the last several years many homeowners were trapped in their home by negative equity. This prevented them from moving up to the home of their dreams. Zillow has just revealed that home equity increased by $1.9 trillion dollars in 2013 an increase of 7.9% in the last twelve months. With home values rising, this pent-up demand will finally be released and move-up properties will be in high demand.

The Immigrant Buyer

No one knows what will happen with immigration reform. However, we do know what such reform would have on housing demand. A recent study released by the Immigration Task Force of the Bipartisan Policy Center (BPC) found that immigration reform, if passed, would dramatically increase demand for housing units; increasing residential construction spending by an average of $68 billion per year over the next 20 years.

We realize that our projections are based on three situations that are still uncertain. However, we believe that these issues will come to fruition and thereby dramatically increase demand for homeownership.

Displaying blog entries 1-5 of 5

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Contact Information

Photo of Summit Real Estate Real Estate
Summit Real Estate
The Bright Choice
330 Dillon Ridge Way, Suite 10
Dillon CO 80435
970-468-6800
800-262-8442
Fax: 970-468-2195

Allison Simson, Owner/Broker, is a licensed Colorado Real Estate Broker