Creative Financing

The number of sales is down 20% compared to this time last year. The main reason is that higher interest rates have made homes less affordable. The current 30 year fixed rate mortgage is about 7.25%. A year ago, the interest rate was about 5.5% and two years ago it was about 3.25%. A recent study found that 71% of would be buyers say that they won't look to buy a home until interest rates get back in the 5's. It's hard to say if or when interest rates will be in the 5's, but there are creative financing options that a seller can offer in order to help a buyer lock an interest rate in the 5's.

Mortgage rate buy downs are becoming more popular and in some cases are the driving force behind a sale. If a seller pays 3 or 4 points to buy down the rate, a buyer could lock in a roughly 5.75% 30 year fixed rate (depending on the rate at the time). A seller would be motivated to pay down a buyer's interest rate because it could help sell their home and could actually save the seller money. For example - a seller who is considering reducing their price by $50,000 may be better off paying $25,000 towards discount points so that a buyer can get a rate in the 5's. In this example, the seller saves $25,000 and the buyer saves over $500 per month on their mortgage payment. The old adage in the real estate business is that, "Buyers don't care as much about the price as they care about their payment."

For Buyers who have been sitting on the sidelines, call me to discuss how Seller paid discount points could get you back in the game.

For Sellers who are hesitant because you've heard the market has slowed, call me to discuss how we can use this strategy to your advantage.

As always, I appreciate your business and your referrals. I hope you have been enjoying the end of summer.

Summer Market Update

Last month I reported that the real estate market appeared to be slowing down and that I'd give you an update as we got into summer. Now that we have reached summer, I can report that the Boulder County real estate market has officially slowed down. In March of this year, the inventory of available homes was down 40% from a year earlier and the number of homes under contract was at 65%. This imbalance was leading to intense multiple offer situations and rapid appreciation. Currently, the inventory of available homes is up 33% from a year ago and the number of homes under contract has decreased to 45% which is causing prices to level off. The market traditionally experiences a seasonal slow down as we get into summer and approach July 4th. This year, the higher interest rates are causing the market to slow a bit more as buyers take a breath and watch to see what will happen next. The Fed’s plan to slow inflation by increasing interest rates is definitely having the desired effect in the real estate segment. I feel this is healthy after the rapid appreciation we have been having for the last 2 years. The good news is that properly priced homes that show well, will still sell. It just may take a few weeks instead of a few days. For buyers, there is an opportunity to look at more homes and have a better opportunity to buy. Even though interest rates are up, which reduces purchasing power, buyers may be able to purchase a home at a better price than a couple of months ago when we were at the peak of the market. Now is the time for discouraged buyers to get back in the game! Please reach out if you want to discuss the current market with me and how I can help to make it work for you, whether you are buying, selling or both. All the best, Rich

Why Now is Actually a Good Time to List

Strong buyer demand is driving quick sales and multiple offers in some cases. What's going on? The first few months of the year are traditionally dominated by a high sense of buyer urgency. That's been boosted lately by a drop in interest rates. Buyers are out in force, trying to lock in the lowest rate possible. Many sellers list in June. But with so many buyers out now, it's worthwhile to get a jump on that rush. With less competition, sellers will likely net a better price. In addition, I'm predicting the market will slow down as the election heats up this summer. Many buyers may sit on the sidelines to wait and see what happens. Listing now does not mean you have to move right away. Buyers are flexible with terms; they simply want to lock in a purchase while they can.

Whether you are buying or selling in Boulder County, it's important to have an experienced and committed agent on your side. Call me to better understand your opportunities in the current market.